Nazara Technologies Hit with INR 5.68 Crore GST Demand Amid Ongoing Tax Scrutiny

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Nazara Technologies, a leading gaming and esports company in India, has been ordered to pay INR 5.68 crore in back taxes, penalties, and interest due to delays in receiving export proceeds. The tax notice was issued by the Additional Commissioner of CGST & Central Excise, Mumbai South Commissionerate, citing non-compliance with stipulated export payment timelines. The company has stated that it intends to appeal the order within the prescribed time frame.

According to a report by Inc42, the tax demand includes INR 2.84 crore in GST liability, with an equal amount levied as a penalty under Section 122(2)(b) of the CGST Act, read with Section 20 of the IGST Act. The tax authorities claim that Nazara failed to receive export payments within the mandated period, resulting in the imposed penalties and accrued interest.

Export Payment Delays Trigger GST Liability for Nazara

Nazara Technologies clarified that this GST demand will not materially impact its financial stability. The company continues to operate within tax regulations and remains committed to resolving the issue legally. This development comes amid a broader taxation crackdown on the gaming sector, where authorities have imposed stringent tax compliance measures.

Last year, two of Nazara’s subsidiaries, Openplay Technologies and Halaplay Technologies, faced show cause notices regarding GST liabilities totaling INR 1,120 crore. The Director General of GST Intelligence in Kolkata proposed liabilities of INR 845.72 crore and INR 274.21 crore for the two subsidiaries, covering financial years from 2017-18 to 2022-23. However, the Calcutta High Court granted interim relief to Openplay Technologies, delaying enforcement while the matter remains under review. The subsidiaries are contesting the GST calculation method, arguing it should be based on gross gaming revenue rather than player pool contributions.

In 2023, the GST Council implemented a 28% tax rate on total contest entry amounts for online gaming, casinos, and horse racing. The previous financial year saw 71 show cause notices issued to gaming firms for alleged GST evasion totaling INR 1.12 lakh crore.

Despite tax challenges, Nazara Technologies is expanding. Its subsidiary, NODWIN Gaming, recently acquired esports broadcasting platform StarLadder for $5.5 million (INR 47.65 crore). Last month, Nazara’s board approved raising INR 495 crore from Axana Estates LLP through a preferential share allotment. The company also acquired two gaming IPs from ZeptoLab to strengthen its mobile gaming portfolio.

As regulations tighten for gaming companies in India, Nazara Technologies continues to navigate legal and financial challenges while pursuing growth. Industry stakeholders are closely watching the company’s response to these tax demands and its broader impact on the gaming ecosystem.

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