First Games Gets GST Notice For ₹57.12 Billion; Parent One97 Says No Operational Impact

First Games Tech, a subsidiary of One97 Communications Ltd., has been issued a show-cause notice by the Directorate General of Goods and Services Tax Intelligence for a proposed tax demand of ₹57.12 billion, the parent company said in an exchange filing on Monday.

The tax authority has held that GST should be levied at 28% on the total entry amount collected by the gaming platform, as opposed to the 18% GST paid on revenue, the company said.

"This is an industry-wide issue. Similar notices have been issued to other gaming companies. The matter is pending before the Supreme Court, which has granted interim relief by staying further proceedings," the filing added.

First Games plans to file a writ petition challenging the show-cause notice and the proposed liability for the period from January 2018 to March 2023, citing legal grounds.

The notice has no impact on the operations or other activities of One97 Communications, the company said. First Games is treated as a joint venture and its revenue is not consolidated. Its contribution to the parent’s consolidated profit or loss for 2023-24 is less than 1%, according to the filing.