Paytm Clarifies GST Ruling Impact on Gaming Subsidiary

One 97 Communications Limited (Paytm) has stated that the recent Supreme Court ruling upholding the 28% Goods and Services Tax (GST) levy on online gaming will have no incremental impact on its consolidated financial statements.

Key Takeaway

Paytm is insulated from its subsidiary's significant GST liability, removing uncertainty for investors.

Supreme Court Upholds 28% GST on Online Gaming

The Supreme Court of India has upheld the 28% GST on online gaming. This ruling relates to a Show Cause Notice (SCN) issued to One 97 Communications' subsidiary, First Games Technology Private Limited (FGTPL), concerning a proposed GST liability of ₹5,712 crore for the period January 2018 to March 2023.

Investor Assurance on Financials

This clarification is crucial for investors as it removes uncertainty regarding a potentially large financial claim against a subsidiary. Paytm assures shareholders that the parent company will not be affected by this specific liability.

Subsidiary's GST Notice Background

FGTPL received the SCN from GST authorities on April 28, 2025. The proposed liability of ₹5,712 crore was substantial and could have posed a risk if it affected the consolidated financial statements of One 97 Communications.

Paytm's Proactive Management of Exposure

For Paytm's consolidated financials, the situation remains unchanged. The company proactively discontinued FGTPL's real money gaming business and ensured its carrying value on the parent company's books is nil. FGTPL is treated as a Joint Venture, accounted for using the equity method, with no consolidated revenues and a nil share of profit or loss for the year ended March 31, 2026.

Risk Mitigation

The main risk addressed is the avoidance of a direct financial burden on Paytm's consolidated accounts. Although the subsidiary still faces the proposed GST liability, its impact on Paytm is confirmed as nil.

Comparison with Peers

While One 97 Communications has clarified its position, other companies in the online gaming or fintech sectors with direct exposure to online gaming revenues or investments may experience different outcomes following the Supreme Court's ruling.

Key Metrics

• Proposed GST Liability for FGTPL (SCN): ₹5,712 crore (Jan 2018 - March 2023)
• Investment Value of FGTPL in Consolidated Financials (as of March 31, 2026): Nil
• FGTPL Discontinued Gaming Business: Effective August 25, 2025

Future Monitoring

Investors should continue to track any developments regarding the GST matter for FGTPL, even though the company has indicated no consolidated financial impact. The focus is expected to remain on the performance of Paytm's core digital payments and financial services business.