Delta Corp Slumps 22% Over Three Sessions Following Supreme Court Ruling, Nazara Tech Declines 7%

Gaming Stocks Plunge as Supreme Court Upholds 28% GST Levy

Gaming stocks such as Delta Corp Ltd and Nazara Technologies Ltd extended their losses for a third straight session, plummeting as much as 22% and 7%, respectively, after the Supreme Court upheld the 28% Goods and Services Tax (GST) levy on online gaming and validated retrospective tax demands on past transactions.

The Supreme Court's verdict, delivered last week, deals a significant setback to the online gaming industry as the government intensifies regulatory oversight. The ruling could potentially saddle the sector with additional GST liabilities estimated at nearly Rs 2.5 lakh crore.

Backing the government's stance, the apex court ruled that online gaming companies are required to pay GST at 28% on the full face value of bets placed by users, rather than on gross gaming revenue (GGR) or platform fees collected by operators.

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As of 12:20 pm on June 2, shares of Delta Corp were down 3.5%, while Nazara Technologies traded largely unchanged at Rs 270.85.

A Supreme Court bench observed that GST demands issued by tax authorities cannot be set aside solely on the basis of challenges to rules framed under the GST regime.

The court also dismissed the contention that online gaming platforms merely act as intermediaries between players. It held that such platforms supply “actionable claims”, bringing them within the ambit of GST taxation.

According to the bench, once money is wagered on uncertain outcomes, even skill-based games assume the characteristics of betting and gambling for GST purposes. The judgment is particularly significant as several gaming firms had contested the retrospective application of the 28% GST levy on transactions conducted before October 2023.

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The industry had maintained that the GST framework in place before the amendments introduced in September 2023 did not explicitly mandate taxation at 28% on the entire contest entry amount.

Note: The table above shows the current price and percent change of the two companies mentioned in the article.