Receive free Indian enterprise & finance updates

We’ll ship you a myFT Daily Digest e mail rounding up the newest Indian enterprise & finance information each morning.

Indian tax authorities have despatched notices to fantasy sports activities and gaming corporations for lots of of tens of millions of {dollars} in again taxes in a stand-off that’s threatening to disrupt the fast-growing trade.

Dream11, the nation’s largest fantasy sports activities firm backed by Tiger Global, acquired a tax demand be aware this month for about Rs12bn ($144mn) from 2017 to 2019, in response to a courtroom submitting difficult the order.

Gameskraft, a Bengaluru-based firm that gives on-line rummy, can be battling a tax demand totalling Rs210bn, in response to a courtroom submitting. India’s Supreme Court is ready to listen to the case subsequent month.

Other corporations have both acquired tax calls for or anticipate to take action shortly, in response to a number of individuals within the trade.

The newest calls for are the fruits of a long-running dispute between Indian tax authorities and fantasy sports activities and gaming corporations over the quantity they owe. The corporations have received a collection of courtroom judgments deeming their providers to be “games of skill” somewhat than playing, which might topic them to greater taxes.

The corporations at the moment pay an 18 per cent tax on the commissions they gather from prospects, however tax authorities argue that corporations have been underpaying.

India’s Goods and Services Tax Council, a federal physique that units the nation’s oblique taxes, last month stated the businesses must begin paying 28 per cent of your entire stake {that a} buyer wagers as New Delhi cracks down on what they argue quantities to betting.

But in its submitting difficult the tax calls for within the High Court of Bombay, Dream11 argued that it was a “settled legal position” that its service was not playing and subsequently not topic to greater taxes.

Indian authorities are more and more involved concerning the trade because it has grown, with finance minister Nirmala Sitharaman calling the upper tax on gaming corporations a “moral question” in August.

The fantasy sports activities dispute comes after New Delhi has fought numerous unsuccessful, high-profile tax battles towards corporations together with Vodafone and Cairn Energy demanding billions of {dollars} in retrospective levies.

Gaming teams have warned that the upper taxes will kill the fast-growing sector. “I don’t think any industry can survive if these demands go through,” stated Roland Landers, chief govt of trade group the All India Gaming Federation.

The Indian gaming market has proved well-liked with overseas enterprise capitalists. Gaming enterprise fund Lumikai estimated the full dimension of the market final 12 months at $2.6bn.

“This was a booming sector,” stated Meyyappan Nagappan, a associate at regulation agency Trilegal who has represented gaming corporations. “It’s going to shake investor confidence.”

Dream11 and Gameskraft declined to remark. India’s tax division didn’t instantly reply to a request for remark.