Dream11, led by Harsh Jain, has joined the growing list of gaming startups taking legal action against tax authorities over alleged GST evasion. Parent company Dream Sports has filed a writ petition in the Bombay High Court, contesting a show cause notice for failing to pay 28% GST on the face value of bets, making it the latest entrant in a high-stakes legal battle.
In a significant development, Dream11, the industry leader in fantasy gaming, has embarked on a legal battle against a massive INR 40,000 Crore goods and services tax (GST) evasion claim made by tax authorities. The move escalates the ongoing dispute between gaming startups and taxation authorities in India.
The Genesis of the Dispute
Dream11's parent company, Dream Sports, has challenged a show cause notice issued by tax authorities, alleging GST evasion and failure to pay the 28% GST on the face value of bets. This move mirrors similar actions by other gaming startups, such as Gameskraft, which recently faced a INR 21,000 Crore show cause notice.
The INR 40,000 Crore claim against Dream11 is poised to set a new record in the history of indirect taxation in India. This staggering figure surpasses the previous high set by the INR 21,000 Crore notice served to Gameskraft. The outcome of this legal battle could significantly impact the gaming industry's future regulatory landscape.
Dream11 chose to remain tight-lipped, declining to provide any official statement or clarification regarding the ongoing legal dispute.
Dream11: The Industry Titan
Dream11 has cemented its position as the dominant player in the Indian fantasy gaming arena, boasting the highest valuation and the largest user base in the country. With a valuation exceeding $8 billion, the platform has successfully attracted over 180 million users to its sports fantasy platform.
Despite the legal challenges, Dream11 has continued to thrive financially. In the financial year ending March 31, 2022, the company reported a noteworthy net profit of INR 142 Crores, supported by an impressive operating revenue of INR 3,840.7 Crores.
As Dream11 and other gaming startups navigate these legal hurdles, the outcome of these disputes will undoubtedly have far-reaching implications for the gaming industry's regulatory framework in India.