Due to an astronomical tax demand of Rs 16,822 crore, the casino operator Delta Corp and its subsidiaries have come under scrutiny from India’s Directorate General of GST Intelligence. This demand, which is effective from July 2017 until March 2022, has shocked the gambling sector. In this article, we’ll examine the specifics of this rare tax notice, the companies involved, and any potential repercussions for Delta Corp and the gambling industry as a whole.
Credits: Business Today
The Tax Bombshell
A hefty Goods and Services Tax (GST) notice in the amount of Rs 11,140 crore has been issued to Delta Corp, a significant player in India’s gaming and casino business. Additionally, notices totaling Rs 5,682 crore have been sent to three of its subsidiaries: Casino Deltin Denzong, Highstreet Cruises, and Delta Pleasure Cruises. The corporation is reeling as a result of these accumulated pressures, which also have significant effects on its financial stability.
The fact that the current problem is not specific to Delta Corp but rather an industry-wide phenomena is an important distinction made by the corporation. Instead of using gross gaming revenue, the GST notice is calculated using the gross bet value. Within the gaming business, this distinction has been a contentious issue, and numerous government representations have been made on this subject. The industry’s main defense is that taxing gross bet value is unfair and does not accurately reflect revenue.
Legal Battles on the Horizon
The subsidiaries of Delta Corp. are not going to take this tax demand sitting down. According to the counsel they have received, the notices and related tax demands are arbitrary and illegal. In order to contest these requests, the firms have sworn to use every legal strategy at their disposal. This creates the possibility of drawn-out legal disputes with important consequences.
Stock Market Impact
The GST letters have sent shockwaves beyond the walls of Delta Corp’s boardroom, reverberating throughout the stock market as well. The closing price of Delta Corp’s shares on the day the notices were made public was Rs 174.25. The company’s stock has lost roughly 29% of its market value after the Indian government suggested a 28 percent GST on online gaming, casinos, and horse racing in July. This significant fall highlights the uncertainty and worry that investors have over the company’s long-term financial stability.
The GST Council decided to impose a 28 percent GST on online gambling, casinos, and horse racing in July in an effort to make the taxes of the gaming industry more clear. The government made it clear that this fee will only be levied at the beginning of a bet, not at any other point. During the previous monsoon session, Parliament adopted these changes to the GST legislation. It’s important to remember that this explanation is still faced with legal challenges and distrust from stakeholders in the sector.
The Impact on Gaming’s Growth
The tax requests and ensuing legal disputes may have a significant impact on India’s gambling industry’s growth prospects. While the government seeks to increase income through higher taxes, it runs the risk of strangling a new industry that has demonstrated tremendous promise. The gaming sector, which includes online gambling, has undergone recent rapid expansion and is recognized as a key contributor to both economic activity and employment creation.
The huge tax demand of Rs 16,822 crore made by Delta Corp and its subsidiaries has brought attention to India’s gaming industry taxation. This action has caused serious concerns about the survival of the sector, combined with the application of a 28 percent GST to gaming-related activity. Gaming corporations are contesting the tax demands, which could lead to protracted legal fights in the future. The gambling sector’s development and contribution to the Indian economy are at risk as a result of these difficulties. It is still to be seen how the government will work with the gaming industry to resolve this complex problem in a way that benefits both parties.