Supreme Court Supports Retroactive 28% GST on Online Gaming

The Indian Supreme Court has confirmed the legality of a 28% retrospective GST levy on online gaming companies, reinforcing it as constitutionally valid.

Justices J B Pardiwala and R Mahadevan concluded that online gaming platforms, including fantasy sports, function not merely as intermediaries but as suppliers that fall under the GST regime for levies and taxes. This judgment deemed these activities, such as staking on uncertain outcomes, to be classified as betting and gambling under the GST framework.

The court also endorsed laws from Tamil Nadu and Karnataka prohibiting online games played for stakes, even those recognized as games of skill, such as rummy and poker. Meanwhile, GST authorities have issued notices to gaming companies for tax evasion, aligning with the government's amendment mandating overseas online gaming firms to register in India from October 1, 2023.

The GST Council in August 2023 confirmed a 28% tax on the total value of bets on these platforms. This decision prompted gaming companies like Games 24x7 and Head Digital Works to challenge the GST demands in various high courts, which the Supreme Court grouped together for a decisive ruling.

(With inputs from agencies.)