23-Sep-2023
2 mins read
In a recent turn of events, Delta Corp, a prominent casino operator in India, finds itself in the eye of a financial storm as it grapples with GST demand notices amounting to a staggering Rs 16,822 crore. These notices, issued by the Directorate General of GST Intelligence, span a period from July 2017 to March 2022. This development comes at a precarious time for Delta Corp, with its valuation exceeding ₹47,000 crore ($566 million), and amid ongoing scrutiny due to the GST Council’s decision in July to impose a 28 percent indirect tax on gaming companies’ revenue from customers.
GST on Gaming: A Clarification
The Indian government clarified that the tax on online gaming would apply only at the entry-level, not on each individual bet. The necessary amendments to GST laws for this purpose were approved by Parliament during the latter part of the monsoon session. This tax is slated to become effective from October 1, 2023, with a provision for a review after six months from implementation.
Delta Corp’s Tax Notices
Delta Corp received two significant tax notices. The first, amounting to Rs 11,140 crore, was issued directly to Delta Corp, while the second, totalling Rs 5,682 crore, was raised against three of its subsidiaries: Casino Deltin Denzong, Highstreet Cruises, and Delta Pleasure Cruises. In response, Delta Corp clarified that the GST demand it received is calculated based on the gross bet value rather than the conventional metric of gross gaming revenue. The company plans to explore legal avenues to contest this order, emphasising that these tax demands are not unique to their company but represent a broader issue affecting the entire industry.
The Core Issue
The central issue at hand revolves around the taxation of the total bet value generated from casino operations, as opposed to the more conventional metric of gross gaming revenue. This matter has been a contentious topic within the industry, leading to various collective appeals presented to the government seeking resolution.
Delta Corp’s Legal Battle
Delta Corp has taken the proactive step of seeking legal counsel, and based on their legal advice, they contend that the notice and associated tax demand are arbitrary and contravene established laws. In response, the company has conveyed its determination to utilise all available legal avenues to contest the tax demand and the related legal proceedings.
In Conclusion
Delta Corp’s current predicament reflects the complex and evolving landscape of taxation in the gaming industry in India. While the company vows to fight the tax notices in a legal battle, the broader issue of how gaming revenue is taxed remains a subject of debate. As the industry awaits further clarity and potential adjustments in the taxation framework, the outcome of Delta Corp’s legal battle could have far-reaching implications for the gaming sector in India. The coming months will undoubtedly witness intense deliberations and negotiations as the gaming industry strives for a resolution to this tax conundrum.