In Wednesday’s afternoon trading session, the share price of one of the leading gaming and casino service providers in India surged 17.2 percent on BSE to hit an intraday high of Rs. 154.95.
The shares of Delta Corp Limited closed in the green at Rs. 147.1, up by 11.3 percent, as against its previous closing price of Rs. 132.15, having a market capitalisation of Rs. 3,939 crore.
According to reports, the Goods and Services Tax (GST) Council is expected to consider a significant change that has the ability to resolve the issue of retrospective taxes and could bring some positive news for the online gaming industry during its meeting on Saturday, which is on 22nd June.
The GST Council, led by Finance Minister Nirmala Sitharaman, may review the taxes of the online gambling industry in the meeting, which imposes a 28 percent tax on the total amount of bets.
The GST Council changed the laws in 2023 to include online gaming, casinos, and horse racing in the taxed category of “betting and gambling.”
At present, a batch of 30 petitions filed by online real money gambling firms opposing retrospective GST notices that seek thousands of crores of rupees are pending before the Supreme Court at a rate of 28 percent on the face value of bets.
In order to give the gaming sector a more favourable taxation system, there is hope that the GST Council would take into consideration amending the CGST Act to remove such retroactive tax demands and impose simpler taxes.
The GST Council is considering a proposal to prevent the imposition of higher GST rates on sectors that paid the tax at a lower rate earlier.
According to CNBC, sectors that were initially charged a lower GST rate compared to the rate later applied by authorities may receive relief from retroactive action. This move aims to address general trade practices where lower GST rates were paid initially, and higher rates were later imposed.
Furthermore, the revised GST law is expected to prohibit GST refunds or cess in instances where higher GST demands have already been paid. This move aims to prevent companies from being penalised for previous compliance caused by unfair trade practices and unclear regulations.
The GST Council will discuss this proposal in the meeting and if implemented, it could lead to tax reductions for online gaming firms like Delta Corp. It might benefit such companies facing Rs. 1.12 lakh crore in tax demands through over 70 notices.
Between September and October 2023, Delta Corp reportedly received several GST notices, with a tax demand of up to ~Rs. 11,140 crore ($1.34 billion) including interest and penalties.
Following the general elections, the online gambling sector had stated that it would approach the new government to request a reduction in the GST. Rather than using the full face value, they proposed computing the tax on the Gross Gaming Revenue (GGR).
If this amendment to the CGST Act is put into effect, it will allow both the states and the central government to waive unpaid GST dues that arise from unclear legal provisions or from “general practices” regularly adhered to by companies.
In terms of financials, the company reported a decline in the revenue from operations by nearly 16 percent QoQ, from Rs. 231.74 crore in Q3 FY23-24 to Rs. 194.8 crore in Q4 FY23-24, but the after-tax profit increased by 109.5 percent from Rs. 34.6 crore to Rs. 72.5 crore, during the same period.
The stock has delivered negative returns of nearly 40.7 percent in one year, and around 2.8 percent of negative returns year-to-date.
Incorporated in 1990, Delta Corp Limited is engaged in the business of casino gaming and holds a dominant position in the gaming industry in India. It is also one of the industry’s largest organised players, having a presence in all gaming formats, including live, electronic, and online.
Written by Shivani Singh
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