Supreme Court upholds 28% GST levy on online gaming bets, says skill/ chance irrelevant if money staked

The Supreme Court on Wednesday upheld retrospective Goods and Services Tax (GST) demands against online gaming companies in a dispute over whether 28% GST could be levied on the full face value of bets placed through their platforms [Directorate of Revenue Intelligence v. Gameskraft]..A Bench of Justices JB Pardiwala and R Mahadevan held that such a GST levy was constitutionally valid and could not be said to violate the Constitutional scheme governing GST.The levy is supported by statutory authority under the GST Act, the Court held. The Court added that the GST levies cannot then be invalidated by independently citing rules made under the Act. The online gaming operators are not mere facilitators or intermediaries, but are suppliers of actionable claims amenable to GST, the Court said. It proceeded to uphold CGST rules that empowered the levy of GST on the full value of bets placed through online gaming platforms as well as casinos. One of the factors on which today's judgment hinged was whether the online games in question could be termed as a betting activity or were skill-based games. The Court today held that even skill-based games acquire the character of betting and gambling for GST once money is staked on uncertain outcomes..The top court also set aside a Karnataka High Court judgment in favour of online gaming platform, Gameskraft. It restored the September 2022 show-cause notice issued to Gameskraft, which had demanded around ₹21,000 crore in GST.The Court, however, clarified that the final decision in the matter is left to the concerned GST authorities. Pending show-cause notices, adjudication proceedings and demands against online gaming, fantasy sports and casino operators will now be decided in line with today's Supreme Court judgment..The case arose from GST notices issued to real-money gaming companies on the basis that 28% tax was payable on the full face value of bets or contest entry amounts, and not merely on the platform fee or gross gaming revenue..The gaming industry’s case was that GST could only be levied on gross gaming revenue, which is the amount retained by platforms after deducting winnings. The companies argued that taxing the entire stake or deposit amount was disproportionate and commercially unviable..The controversy intensified after the GST Council decided in 2023 to impose 28% GST on the full face value of online gaming, casinos and horse racing. The Revenue’s stand was that the amendment only clarified the existing legal position. Gaming companies, however, argued that the levy could not be applied retrospectively for the period before October 1, 2023..The demands against the industry initially stood at around ₹1.12 lakh crore. With interest and penalties, the potential exposure was estimated to be much higher. Some later reports placed the total exposure at around ₹2.5 lakh crore..One of the lead cases involved Gameskraft Technology, which was issued a GST notice of around ₹21,000 crore. The department alleged that the company was liable to pay 28% GST on betting volumes of around ₹77,000 crore generated through platforms such as Rummy Culture, Gamezy and Rummy Time.Gameskraft challenged the notice before the Karnataka High Court. The High Court ruled in its favour, holding that rummy is a game of skill and that the company was not supplying actionable claims in the manner alleged by the tax department.The GST department appealed to the Supreme Court. In September 2023, the Supreme Court stayed the Karnataka High Court ruling, after the department argued that the judgment had affected similar tax proceedings against other online gaming companies..The batch of cases before the Supreme Court, therefore, raised larger questions on whether online skill games played for stakes could be treated like betting or gambling for GST purposes, whether the 2023 amendments were merely clarificatory, and whether the tax demands could be enforced retrospectively.The Court today held that these amendments were clarificatory. .Earlier, in December 2024, the Supreme Court stayed the GST proceedings against the companies after the Centre told the court that some show cause notices will run their course in February 2025. The interim order has now been vacated. The matter was ultimately reserved for judgment in August 2025. .Today's judgment may also have a bearing on challenges by online gaming companies to the law banning real money games in India. .The gaming companies were represented by Senior Advocates Harish Salve, AM Singhvi, Mukul Rohatgi, Neeraj Kishan Kaul, Arvind Datar, Dhruv Mehta, Balbir Singh, Sajan Poovayya, V Sridharan, Gopal Sankaranarayanan, Vikram Nankani, Tarun Gulati, Abhishek Malhotra, Sanjay Jhanwar, Jay Savla and Vivek Reddy..The Central government was represented by Solicitor General Tushar Mehta and Additional Solicitor General N Venkataraman. .[Read Judgment].[Live Coverage]