The Supreme Court on Wednesday upheld the retrospective Goods and Services Tax (GST) demands against online gaming companies, ruling that 28 per cent GST can be levied on the full face value of bets placed through their platforms in cases involving real-money gaming.
The Bench of Justice JB Pardiwala and Justice R Mahadevan held that the levy was constitutionally valid and in line with the statutory framework of the GST regime.
The Court observed that online gaming companies were not merely intermediaries or facilitators, but suppliers of actionable claims that were taxable under the GST law. It further held that GST levied under the parent statute could not be invalidated solely by challenging the rules framed under the Act.
The Bench ruled that once money was staked on uncertain outcomes, even games involving skill assumed the character of betting and gambling for GST purposes. The Court said the distinction between games of skill and games of chance becomes irrelevant in cases involving wagering with real money.
The judgment also upheld the CGST Rules permitting GST to be imposed on the full value of bets placed through online gaming platforms and casinos.
The Apex Court set aside the Karnataka High Court judgment that had earlier granted relief to online gaming company Gameskraft. The High Court had quashed a September 2022 show-cause notice demanding nearly ₹21,000 crore in GST from the company.
The Supreme Court restored the notice, while clarifying that the final adjudication on liability would now be undertaken by the concerned GST authorities. Pending show-cause notices, adjudication proceedings and tax demands against online gaming, fantasy sports and casino operators will now be decided in accordance with the ruling.
The dispute stemmed from GST notices issued to real-money gaming companies on the ground that 28% GST was payable on the entire face value of bets or contest entry amounts, rather than only on the platform fee or gross gaming revenue retained by operators.
Gaming companies had argued that taxing the entire stake amount was excessive and commercially unviable. They contended that GST should apply only to gross gaming revenue, the amount retained after distributing winnings to players.
The controversy escalated after the GST Council in 2023 decided to impose 28% GST on the full-face value of online gaming, casinos and horse racing. While the Revenue maintained that the amendments merely clarified the existing legal position, gaming companies argued that the levy could not be enforced retrospectively for periods prior to October 1, 2023.
The Supreme Court accepted the Revenue’s stand and held that the amendments were clarificatory in nature.
The industry initially faced GST demands estimated at around ₹1.12 lakh crore, with total exposure, including penalties and interest, reportedly rising to nearly ₹2.5 lakh crore.
One of the lead matters involved Gameskraft, which received a GST notice of about ₹21,000 crore. Tax authorities alleged that the company was liable to pay 28% GST on betting volumes of nearly ₹77,000 crore generated through platforms such as Rummy Culture, Gamezy and Rummy Time.
The Karnataka High Court had earlier ruled in favour of Gameskraft, holding that rummy is predominantly a game of skill and that the company was not supplying actionable claims in the manner alleged by the department.
However, the GST department challenged that ruling before the Supreme Court. In September 2023, the apex court stayed the High Court judgment after the department argued that it had adversely affected similar proceedings against other online gaming operators.
The batch of cases before the Supreme Court raised broader questions regarding whether online skill-based games played for stakes could be treated as betting or gambling under GST law, whether the 2023 amendments were merely clarificatory, and whether retrospective tax demands were legally sustainable.
In December 2024, the Supreme Court had stayed GST proceedings against several gaming companies after the Centre informed the Court that certain show-cause notices were nearing completion. That interim protection now stands vacated.
The matter had been reserved for judgment in August 2025.
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