Paytm’s First Games Sees GST Demand Cut from ₹5,712 Cr to ₹704 Cr

First Games Technology, a subsidiary under One 97 Communications which is the parent company of Paytm, has seen a significant reduction in its Goods and Services Tax (GST) demand. The tax liability was lowered drastically from ₹5,712 crore to ₹703.66 crore for the period covering April 2018 through March 2023, according to an official stock exchange disclosure.

This revised tax demand was communicated to First Games through an order issued by the Additional Commissioner of Central Goods and Services Tax (CGST) in Noida, Uttar Pradesh. The company received the order on October 12, 2026. Along with the tax demand, the order also includes a penalty matching the tax amount and applicable interest charges.

One 97 Communications has clarified that this new order will not create any additional financial burden on the parent company. First Games is treated as a joint venture for group consolidation, meaning its revenue does not appear in One 97 Communications' consolidated financial statements. The company reported that First Games’ contribution to profit or loss, accounted for using the equity method, was zero in the consolidated profit and loss statement for the fiscal year ending March 31, 2026.

Additionally, the investment value of Paytm in First Games stood at nil as of March 31, 2026, reflecting the financial position of the subsidiary within the group.

The original GST show-cause notice was issued on April 28, 2025, and had demanded a hefty ₹5,712 crore tax liability, excluding separate interest and penalties. This notice covered the same tax period as the revised order. The significant reduction in demand marks a notable development in the ongoing tax scrutiny of First Games.

It is important to note that First Games ceased its real-money gaming activities following the introduction of the Promotion and Regulation of Online Gaming Act, 2025. The company’s financial statements for the year ending March 31, 2026, were prepared on a liquidation basis, reflecting the winding down of its operations.

Following the receipt of the revised order, First Games is currently assessing its legal options under applicable statutory regulations. The company aims to respond appropriately to the tax authorities based on this new development.

This case is part of a broader context where Indian authorities are closely examining the taxation and regulation of online gaming enterprises, especially in light of the recent legislation aiming to provide a framework for the sector. The significant adjustment in GST demands for First Games illustrates the complexities companies face in navigating evolving regulatory landscapes.

One 97 Communications and its subsidiaries like First Games operate in a competitive and rapidly changing market. The online gaming sector in India has seen exponential growth but also increased regulatory scrutiny, making compliance and legal clarity crucial for sustained business operations.

Investors and market watchers will likely monitor how First Games and Paytm manage the financial and legal implications of this revised GST demand and the ongoing impact of regulatory changes on their gaming ventures.