Paytm's Subsidiary First Game Technologies Faces ₹5712 Crore GST Tax Demand, Plans Legal Challenge

The Directorate General of GST Intelligence (DGGI) has slapped a show cause notice demanding Rs 5712 crore tax liabilities on fintech major Paytm subsidiary First Game Technologies.

Earlier Paytm parent company One97 Communication Ltd (OCL) had been hit with a show-cause notice from the Enforcement Directorate for alleged violations of the Foreign Exchange Management Act involving aggregate transactions worth over Rs 611 crore related to the acquisition of the two subsidiaries.

“The tax demand notice on First Games has computed GST at 28 per cent on the total entry amount, as against 18 per cent paid on platform fee or revenue generated by gaming companies,” clarified One97 Communications Ltd. (OCL) parent company of Paytm.

The tax demand for the period January 2018 to March 2023 includes interest and penalties of the total Rs 5712 crore tax liabilities.

The fintech major and payment aggregator plans to file a petition challenging the notice, including the retrospective application of the GST amendment dated October 1, 2023, along with the interpretation of the GST regulation prior to the amendment.

“It is an industry-wide issue where the GST department has sent notices to several gaming companies previously. This matter is currently pending with the Supreme Court and they have granted interim relief by staying further proceedings,” said the company in a statement.