 "Delta Corp, Nazara Tech jump up to15% as SC stays GST notices indefinitely")
SC order on gaming companies: Delta Corp shares soared as much as 15.4 per cent on the stock exchanges on Friday, January 10, 2025.
The surge in Delta Corp share price came after the Supreme Court of India (SC) stayed the goods and services tax (GST) show-cause notice against online gaming firms indefinitely.
Hearing an urgent plea filed by online gaming firms, the SC, on Friday, said "all further proceedings under the show-cause notice shall remain stayed till the case is finally decided".
The next date of hearing is March, 2025.
On the stock exchanges, Delta Corp share price hit an intraday high of Rs 130.8 per share on the BSE and Rs 131.2 per share on the NSE. The stock, however, pared gains later to trade around Rs 118 level, up 4.5 per cent, on the exchanges at 12:15 PM. By comparison, the BSE Sensex and Nifty were flat at that time.
Nazara Technologies share price, too, soared 8.4 per cent in the intraday trade before erasing all the gains to trade 1.16 per cent lower at Rs 979.45 per share on the BSE at the time of writing this report. Delta Corp Limited, a flagship company of the Group, is engaged in the casino (live, electronic and online) gaming industry in India. Incorporated in 1990 as a textiles and real estate consultancy company and has evolved into a diversified segments like Casino gaming, Online gaming, Hospitality and Real estate. Nazara Tech, too, is an online gaming company that owns games like Kiddopia, Animal Jam, Love Island, Classic Rummy among others.
Online Gaming GST case
Online gaming companies had sought a stay on GST demand notices, pleading that the final hearing on the constitutional validity of the GST imposed may take considerable time, potentially leading to adverse actions such as tax recoveries, freezing of bank accounts, and issuance of summons in the interim.
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Notably, the Rajya Sabha, in December 2023, was informed that online gaming companies were served 71 show-cause notices related to GST evasion, amounting to Rs 1.12 trillion for financial year 2022-23 and the first seven months of 2023-24.
This came after the 50th GST Council, at its meeting in July 2023, decided to levy a 28-per cent GST on online games—both skill-based and chance-based categories – higher than 18 per cent charged earlier.
The new tax rate took effect on October 1, 2023.
That apart, gaming companies voiced concerns about the uncertainty surrounding the calculation of the tax amount. They questioned if the applicable GST rate should be levied only on the revenue earned by gaming companies—typically their platform fees or commissions—or on the total amount contributed by players as pool money.
Taxing the entire pool amount at a higher rate would result in a significantly larger tax burden, potentially impacting the viability of these businesses. This dual-layered dispute, involving both the classification and valuation of gaming services, has created uncertainty in the industry. READ MORE