Nazara Technologies faces Rs 2.83 crore tax demand from DGGI Mumbai

On September 27, Nazara Technologies reported receiving a show-cause letter from the Director General of GST Intelligence in Mumbai regarding a tax demand of Rs 2.83 crore with interest and penalties.

This tax demand, however, has nothing to do with the ongoing problem of retrospective taxes that plagues India's real-money gaming industry. The company announced in a stock market filing that it would respond to the aforementioned show cause notice in accordance with the established deadlines.

"Nazara exported services under a letter of undertaking without payment of GST as per rule 96A of CGST Rules, 2017. As export proceeds have still not been received (on account of a force majeure event) section 2(6)(iv) does not comply, the sale of services can’t be treated as the export of services and hence company is responsible for paying IGST at 18% on the value of such services" the show cause notice states, as per the filing.

The company said, in the filing, there has been a delay in receiving the proceeds from the export of services due to unforeseen events beyond the company's control.