India’s GST battle: Govt seeks adjournment on gaming tax case
The Indian government has sought an adjournment in the Supreme Court regarding the 28 percent Goods and Services Tax (GST) imposed on gaming companies. This case is estimated to have a financial impact of ₹2.5 lakh crore ($30.1 billion). Gaming companies argue that the tax is unfair and could severely impact the real-money gaming (RMG) sector.
On Tuesday, Additional Solicitor General (ASG) N. Venkatraman, representing the government, requested a delay due to another critical taxation matter. Senior advocate Dr. Abhishek Manu Singhvi, appearing for gaming company Gameskraft, suggested the hearing be scheduled for late March or April, according to Storyboard18. However, Justices JB Pardiwala and R. Mahadevan showed a preference for hearing the case within the next few days.
Earlier in January Supreme Court stayed Goods and Services Tax (GST) proceedings against 49 online gaming companies over retrospective demand notices issued on the full face value of bets placed through their platforms. The bench, comprising Justices JB Pardiwala and R Mahadevan, granted the stay following the GST department’s request and scheduled the case for further hearing on 18 March 2025.
Gaming companies challenge government’s tax interpretation
The legal dispute revolves around Rule 31A of the Central Goods and Services Tax (CGST) Rules. This rule states that GST at 28 percent should be applied to the face value of each bet. The government argues that this taxation applies to online skill-based games when played for stakes, classifying them as betting or gambling.
Gaming companies, however, maintain that Rule 31A applies only to gambling and betting, not to games of skill like poker, rummy, and fantasy sports. Multiple High Court rulings have previously upheld the distinction between skill-based gaming and gambling, reinforcing the industry’s stance.
High stakes for India’s real-money gaming industry
The 28 percent GST has had a severe impact on the gaming industry, leading to reduced investment, job losses, and financial stress on platforms. If the Supreme Court rules in favour of gaming companies, it would set a significant legal precedent, strengthening the skill-versus-gambling distinction. Such a decision could also influence future regulatory policies and investor confidence in India’s gaming sector.
An unnamed counsel mentioned in the Storyboard18 report said, “The industry has a very strong case on merits as plethora of High Court judgments support the case and there is seven-decade of jurisprudence making it clear that games of skill are distinct from gambling and betting. The government is claiming that Rule 31A of CGST Rules (taxation of gambling/betting at 28 percent on face value of bets) is applicable for the period July 2017-October 2023, online skill-gaming when played for stakes falls within the ambit of betting and gambling and that the platforms are supplying actionable claims amounting to gambling and betting.”
In an earlier conversation with SiGMA News, Corporate Lawyer Divya Sharma remarked, “Under the previous GST regime, transactions involving gambling or games of chance (both online and offline) were subject to a 28 percent tax on the total bet amount. In contrast, games of skill were taxed at 18 percent on the Gross Gaming Revenue (GGR).”
“However, under the new GST regime, the imposition of a 28 percent GST on the Contest Entry Amount for games of skill undermines this fundamental distinction, which has served as the cornerstone of legal and tax jurisprudence for online gaming in India. It is crucial to note that the full-face value of bets does not belong to the gaming company but is distributed among the players, making such a valuation approach flawed,” Sharma added.
