Dream11 slapped with Rs 1,210 crore tax notices: Report

Income tax heat on Dream11: The Income Tax department of India has demanded around Rs 1,210 crore ($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, Reuters reported quoting legal documents.

According to the report, Dream11 and 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 per cent tax on total gaming revenue it makes from players, court papers showed.

On September 12, the tax authorities gave Dream11 a month (30 days) to explain why it should not be forced to pay a shortfall of Rs 210 crore for 2017-18 and Rs 1,000 crore for 2018-19, plus interest and a penalty, government notices showed.

The report also said that Dream11 has filed a lawsuit in the Bombay High Court challenging the notices and that the case is likely to be heard in the coming days.

Mumbai-based Dream11 was set up in 2008 and counts US investment fund Tiger Global as a major investor. The company also said in the court filing that tax authorities are investigating its tax payments for four more years up until March 2023.

Indian tax inspectors are "alleging that the service" provided by Dream11 "is that of betting/gambling/wagering", court papers seen by Reuters showed.

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.

(With Reuters inputs)