Supreme Court Upholds 28% Retrospective GST on Online Gaming, Calls Real-Money Games ‘Betting and Gambling’

The Supreme Court (SC) in a recent significant ruling has sustained the decision of the Central Government of India about imposing retrospective GST (Goods and Services Tax) at 28% on real-money online gaming companies on the full value of bets placed on their platforms. The court asserted that online gaming activities involving money staked on uncertain outcomes fall under “betting and gambling” for GST purposes and are therefore liable for taxation under the law.

The bench comprising Justices J B Pardiwala and R Mahadevan held that, “Online gaming activities, including fantasy sports and other games played on digital platforms, involving staking upon uncertain outcomes, constitute betting and gambling for the purpose of the GST framework.”

The SC has ruled that online gaming platforms are not just intermediaries facilitating games but suppliers of actionable claims that can be taxed under the GST law. Fantasy sports and other online games played for money are covered under the ruling.

The dispute arose when several Real-Money Gaming (RMG) companies filed an appeal challenging certain GST notices passed by the tax authorities on the grounds of different interpretations of their tax burden. Previously in October 2023, the GST Council had affirmed that 28% GST will be imposed on the entire value of bets made on gaming platforms and not only on the platform’s earnings or commission. The tax authorities also tried to collect taxes retrospectively, saying the clarification only interpreted existing provisions.

However, the RMG companies argued that ideally GST should merely be imposed on gross gaming revenue, which is the amount retained by the platform after paying winnings to players. Further, it was argued that levying a tax on the full bet value would severely affect the entire gaming industry and make operations commercially impractical.

Furthermore, it was highlighted that the industry is already facing several key challenges after the introduction of the Promotion and Regulation of Online Gaming Act 2025 by the government of India. The act effectively banned real-money gaming. Multiple companies have suffered major job losses, shutdowns, and business restructuring, including Dream11, Mobile Premier League, Games24x7, and Winzo. Major industry players involved in the legal battle included Gameskraft, Delta Corp and Head Digital Works.