Delta Corp, a major Indian casino operator, disclosed that it has received a tax notice from the government, demanding payment of 111.4 billion Indian rupees ($1.34 billion) in taxes, interest, and penalties for the period spanning July 2017 to March 2022.
This tax demand comes at a challenging juncture for the company, with its total valuation exceeding $566 million. Delta Corp is already contending with the repercussions of a recent move by India’s Goods and Services Tax (GST) Council. In July, the council imposed a 28 percent indirect tax on the money collected by gaming companies from their customers, adding pressure to the industry.
The GST amount being claimed is calculated based on the gross bet value of all games played at the casinos during the stipulated period, as indicated by Delta Corp. The company noted that a show cause notice would be issued if the payment was not made.
Delta Corp highlighted that the demand for GST on the gross bet value, rather than the gross gaming revenue, has been a contentious issue within the industry. The company emphasized that multiple representations have already been made to the government at an industry level concerning this matter.
In response to the tax demand, Delta Corp declared its intent to explore all available legal options to challenge the demand and initiate related legal proceedings.
Despite global investors urging Indian Prime Minister Narendra Modi to reconsider the 28 percent gaming tax, citing potential adverse effects on prospective investments totaling approximately $4 billion, the country’s revenue secretary has maintained that there is no need to revise the tax rate.
In the wake of the new 28 percent GST tax, gaming companies are already feeling the impact. Just last month, gaming app Mobile Premier League announced its decision to lay off 350 employees to navigate and mitigate the financial burden imposed by this tax.