Friends, there has been a lot of news in the media about Online Betting Apps. A few states have already banned Online gaming operators, as these involve money transactions. As per the Supreme Court ruling, betting and gambling enjoy no fundamental right, and skill/chance distinctions are irrelevant when monetary stakes are involved.
A flat 28% GST on the full value of online money gaming (covering both games of skill and chance) was introduced in India on 1st October 2023. Prior to this, online skill gaming platforms were typically taxed at 18% on their platform fees or Gross Gaming Revenue.
The retrospective 28% GST on online gaming platforms and betting was primarily challenged by the gaming industry in the Supreme Court (SC) following the initial GST Council announcement in late 2023. Several rounds of petitions were consolidated, with dedicated hearings commencing in May 2025.
Yesterday, SC upheld the levy of GST on online gaming activities as constitutionally valid, and rejected the challenge mounted against the levy of GST on actionable claims arising from betting and gambling transactions.
The court held that even skill-based games acquire the character of betting and gambling for GST once money is staked on uncertain outcomes. The essential element of betting lies in staking money on uncertain outcomes. The character of betting and gambling does not exclusively depend upon whether the underlying activity is a “game of skill” or a ‘game of chance”, but upon future uncertain contingencies. Consequently, even where the underlying activities involve substantial elements of skill, once participation is contingent upon staking money or money’s worth on uncertain outcomes, the resultant transaction acquires the character of betting and gambling within the GST framework.
Therefore, SC held:
“ 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 levy of GST of the supply of actionable claims arising from betting and gambling is constitutionally valid and does not transgress Article 366(!@) and 366 (12A) of the Constitution”.
The court observed that mere commercial hardship, reduction in profitability or increase of tax incidence can not by themselves render a fiscal measure unconstitutional. The levy is supported by statutory authority traceable to Sections 7, 9, and 15 of the CGST Act.
Gaming Operators not Intermediaries; Suppliers
The Court held:
That online gaming activity involving pooled stakes and contingent price structure gives rise to an actionable claim interest constituting taxable supplies within the meaning of Section 7 of the GST Act. The online gaming operators are not mere intermediaries facilitating transactions inter se between participants, but themselves constitute suppliers of such actionable claims.
Background
Before the law was amended in 2023, online gaming companies generally paid GST at 18% on their platform fee or commission, commonly referred to as Gross Gaming Revenue (GGR). Under this model, if a player deposited Rs 100, the platform would retain a portion, say Rs 10, as commission and the remaining amount would form part of the prize pool. GST on this Rs 10 @ 18% would be paid (i.e., Rs 1.80).
The GST authorities argued that online real-money gaming platforms were effectively facilitating betting or gambling transactions and that GST should be levied on the entire amount staked by users, not merely the commission earned by the intermediary. This meant that, on a Rs 100 deposit, the tax liability would rise from Rs 1.80 to Rs 28, if taxed at 28% on the full face value.
The controversy intensified because the tax department also issued substantial show-cause notices to gaming companies for past periods based on the broader interpretation. Several companies challenged these demands, arguing that the pre-amendment legal framework did not support taxation on the full value of stakes and that the government was effectively imposing a retrospective tax burden through administrative interpretation.
The cumulative tax demands reportedly ran into more than Rs 1 lakh crore, making it one of the most significant indirect tax disputes in the digital economy sector.
Now SC has ruled against real-money gaming platforms by validating a retrospective 28% GST on the full face value of bets.
Now, what is going to be the fate of all these gaming companies/platforms that are going to face the demand of paying retrospective GST amount?
Anil Malik
Mumbai, India
28th May 2026