Gameskraft Faces ₹21,000 Cr Tax Evasion Notice Amidst Industry Turmoil
Gameskraft, a prominent gaming startup in India, is grappling with a massive tax evasion notice and allegations of financial misconduct, adding to the industry's ongoing turmoil. The company's former group chief financial officer, Ramesh Prabhu, is at the centre of the storm.
The Directorate General of GST issued a ₹21,000 crore tax evasion notice to Gameskraft, which was later stayed by the Supreme Court. The notice followed revelations that Prabhu had wrongly recorded ₹211.53 crore as 'investments' in the company's books, inflating it to ₹250.57 crore by March 2024. An additional ₹19.86 crore had to be expensed in FY25, leading to a total write-off of ₹270.43 crore.
Prabhu admitted his wrongdoing in an email on March 5, 2024, stating that no other Gameskraft employee was involved. However, he stopped reporting to work after March 1, 2024, and remained incommunicado until his official termination in August 2024. Gameskraft later filed an FIR against Prabhu, accusing him of theft, criminal breach of trust, forgery, and other offenses under the Bharatiya Nyaya Sanhita. The alleged misappropriation cost the company a staggering ₹250+ crore.
The gaming industry in India is facing one of its toughest years. In August 2024, Parliament passed the new Online Gaming Act, effectively banning all forms of real-money gaming in the country, forcing Gameskraft to pause its RMG offerings. Earlier, in May 2024, Gameskraft suspended its online poker platform Pocket52 due to the 28% GST regime introduced in October 2023.
Gameskraft is now navigating the complex legal and financial aftermath of Prabhu's actions. The company's future in the Indian gaming landscape remains uncertain, especially with the recent ban on real-money gaming. The industry eagerly awaits developments in this high-stakes case.
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