Paytm’s parent company One 97 Communications Ltd has informed that its subsidiary First Games Technology Pvt Ltd has received a major show cause notice (SCN) from the GST department (DGGI). In this, tax dues of about Rs 5712 crore have been reported on the company, which is for the period from January 2018 to March 2023. Along with this, interest and penalty have also been demanded.Paytm has said that this is not just a matter of their company, but an issue related to the entire online gaming industry, about which the dispute has been going on for the last 18 months. DGGI says that gaming companies should pay 28% GST on the total entry amount, whereas till now companies have been paying only 18% GST on platform fees.Paytm said that many online gaming companies have already received such notices. This matter is pending in the Supreme Court and the court has currently given relief to many companies. On the basis of this, First Games is also going to file a petition in the court, so that the tax notice can be challenged on legal grounds.First Games says that this notice is retroactively applying the changes made in the GST rules on October 1, 2023, which is not legally correct. The company will seek interim relief from the court, as other companies have received.Talking on this topic, Financial Analyst Anil Bhatt said, “Paytm has clarified that this notice will not affect its main operations, as First Games is treated as a joint venture(JV). The share of this JV in the total profit or loss of the company is less than 1%. Paytm also said that the company’s investment in First Games has already become 0 rupees. Now the company has a financial exposure of only about Rs 225 crore there which is in the form of shareholder loan.”
Reporting to True to Life News