By Aditya Kalra and Arpan Chaturvedi
NEW DELHI (Reuters) – India’s tax department has demanded around $150 million from Tiger Global-backed gaming company Dream11 for underpaying taxes during 2017-2019, which the company disputes, and officials are investigating its payments for four more years, legal documents show.
Dream11 and Indian tax authorities are in a dispute over what tax rates should be paid by such gaming platforms, which have become hugely popular for fantasy cricket games they offer. Dream11 argues it should pay a tax on fees it charges customers, while Indian authorities are demanding a higher 28% tax on total gaming revenue it makes from players, court papers show.
On Sept. 12, the tax authorities gave the company 30 days to explain why it should not be forced to pay a shortfall of 2.1 billion rupees ($26.07 million) for 2017-18 and 10 billion rupees ($120.85 million) for 2018-19, plus interest and a penalty, government notices show.
Dream11 declined to comment and India’s tax authorities did not respond to a request for comment.
Dream11 has filed a lawsuit in the High Court in Mumbai challenging the notices, court papers showed. The case is likely to be heard in coming days.
Mumbai-based Dream11 was set up in 2008 and counts U.S. investment fund Tiger Global as a major investor.
Tax authorities are also investigating Dream11’s tax payments for four more years up until March 2023, the company stated in its court filing, which was seen by Reuters but has not been made public.
Indian tax inspectors are “alleging that the service” provided by Dream11 “is that of betting/gambling/wagering”, court papers stated.
But Dream11 argued its gaming platform is a “games of skill” and attracts a lower tax rate which should be levied on its earnings, known as platform fees, and not the prize pool.
(This story has been refiled to fix a typo in the headline)
(Reporting by Aditya Kalra; Editing by Susan Fenton)
