Dream 11 Got Notice From DGGI For Tax Evasion Of Whooping Rs 40000 Crore: The Directorate General of GST Intelligence (DGGI) reportedly served a pre-show cause notice on Dream 11 for alleged GST evasion of about Rs 40,000 crore, making it possibly the largest indirect tax notice served in the country.
According to those acquainted with the situation, the claims against the Mumbai-based business will be in the range of Rs 40,000 crore. The Economic Times, on the other hand, puts the figure at Rs 25,000 crore. Dream Sports refuses to comment on the news. In FY22, Dream11 reported a net profit of Rs 142 crore on operational sales of Rs 3,841 crore.
Dream11 is the market leader in India’s fantasy gaming business, both in terms of valuation and user base. The company’s most recent valuation reached $8 billion, and its sports fantasy platform has over 180 million users.
Moneycontrol reported earlier this month that the Central Board of Indirect Taxes and Customs (CBIC) is likely to issue showcause notices to over 40 skill-gaming companies for alleged tax evasion after the Supreme Court stayed a Karnataka High Court judgement quashing a GST notice against Gameskraft for alleged tax evasion amounting to Rs 21,000 crore.
Dream 11 Has Seek For The Legal Help From High Court
Dream Sports, the parent company of real-money gaming startup Dream11, has filed a writ case in Bombay High Court, disputing a show cause notice issued by tax officials for suspected GST avoidance and failure to pay 28% GST on the face value of bets.
Dream11, managed by Harsh Jain, appears to be the second gaming company, after Gameskraft, to go to court in response to a show cause notice issued by the tax authorities for suspected GST dodging. The current largest such claim is claimed to be the INR 21,000 crore show cause notice issued to Bengaluru-based Gameskraft.
It should be remembered that the Directorate General of GST Intelligence (DGGI) served Gameskraft with an INR 21,000 crore show cause notice last year for alleged indirect tax fraud on a betting amount of INR 77,000 crore between 2017 and June 2022. Following this, the corporation filed an appeal with the Karnataka High Court, which dismissed the notice.
The Supreme Court will hear the case again in the following weeks. Skill gaming CEOs and legal experts have already warned Moneycontrol that a negative judgement from the Supreme Court might be the final nail in the coffin for the business, which is already hurting from the GST Council’s newly approved 28 percent GST system.
The GST Council resolved in July 2023 to impose the maximum GST slab of 28 percent on the whole face value, regardless of whether it is a skill or chance game. On August 2, it gave some respite by suggesting that GST be paid on deposits rather than bets in order to prevent double taxation.