First Games Technology Pvt Ltd, a subsidiary of One 97 Communications Ltd (OCL), the parent company of Paytm, has received a show cause notice from the Directorate General of GST Intelligence (DGGI), raising a GST demand of ₹5,712 crore for the period between January 2018 and March 2023.

The notice, issued on April 28, 2025, alleges that gaming companies should pay 28% GST on the entire entry amount collected from users, rather than the 18% currently applied to platform fees, which form the actual revenue of such firms.

Paytm, in a regulatory filing to the NSE, stated that this is not an isolated incident and that multiple gaming platforms have received similar notices. The company intends to legally contest the notice by filing a writ petition. It will argue against the retrospective enforcement of the October 2023 GST amendment and will also seek interim relief, citing similar cases already before the courts.

Paytm clarified that the notice will not affect its core business operations, noting that First Games is treated as a joint venture for accounting purposes and its financials are not consolidated with Paytm’s. As of March 31, 2024, Paytm’s exposure to First Games stood at about ₹225 crore, mostly via shareholder loans and interest, while the investment value has already been written down to zero.

This GST development adds to Paytm’s recent regulatory challenges, including a show cause notice from the Enforcement Directorate (ED) in relation to alleged irregularities involving Little Internet Pvt Ltd (LIPL) and NearBuy India Pvt Ltd (NIPL). These issues have emerged just ahead of Paytm’s Q4 earnings report. In Q3 FY25, Paytm posted revenues of ₹1,828 crore and a loss of ₹208 crore.

The outcome of the GST dispute remains pending in the Supreme Court, which has so far granted interim relief to several affected gaming companies.

First Games Technology Pvt Ltd, a subsidiary of One 97 Communications Ltd (OCL), the parent company of Paytm, has received a show cause notice from the Directorate General of GST Intelligence (DGGI), raising a GST demand of ₹5,712 crore for the period between January 2018 and March 2023.

The notice, issued on April 28, 2025, alleges that gaming companies should pay 28% GST on the entire entry amount collected from users, rather than the 18% currently applied to platform fees, which form the actual revenue of such firms.

Paytm, in a regulatory filing to the NSE, stated that this is not an isolated incident and that multiple gaming platforms have received similar notices. The company intends to legally contest the notice by filing a writ petition. It will argue against the retrospective enforcement of the October 2023 GST amendment and will also seek interim relief, citing similar cases already before the courts.

Paytm clarified that the notice will not affect its core business operations, noting that First Games is treated as a joint venture for accounting purposes and its financials are not consolidated with Paytm’s. As of March 31, 2024, Paytm’s exposure to First Games stood at about ₹225 crore, mostly via shareholder loans and interest, while the investment value has already been written down to zero.

This GST development adds to Paytm’s recent regulatory challenges, including a show cause notice from the Enforcement Directorate (ED) in relation to alleged irregularities involving Little Internet Pvt Ltd (LIPL) and NearBuy India Pvt Ltd (NIPL). These issues have emerged just ahead of Paytm’s Q4 earnings report. In Q3 FY25, Paytm posted revenues of ₹1,828 crore and a loss of ₹208 crore.

The outcome of the GST dispute remains pending in the Supreme Court, which has so far granted interim relief to several affected gaming companies.