The Supreme Court has upheld retrospective Goods and Services Tax (GST) demands against online gaming companies in a case concerning the applicability of 28% GST on the full face value of bets placed through gaming platforms. A Bench comprising Justices JB Pardiwala and R Mahadevan has ruled that the levy is constitutionally valid and supported by statutory authority under the GST Act. The Court has also held that online gaming operators are suppliers of actionable claims and not merely intermediaries.
As per media reports, the Court has observed that even skill-based games acquire the character of betting and gambling once money is staked on uncertain outcomes. It has upheld CGST rules enabling GST on the full value of bets placed through online gaming platforms and casinos. The Court has also set aside the Karnataka High Court judgment that had ruled in favour of Gameskraft and restored the September 2022 show-cause notice seeking nearly Rs 21,000 crore in GST from the company. However, the Court has clarified that the final determination in the matter will be made by the concerned GST authorities.
The judgment has stated that 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 Supreme Court ruling. The detailed judgment is awaited.
The dispute had originated from GST notices issued to real-money gaming companies on the grounds that 28% GST was payable on the full face value of bets or contest entry amounts instead of only the platform fee or gross gaming revenue. Gaming companies had argued that GST should apply only to gross gaming revenue retained by platforms after deducting winnings, stating that taxation on the entire stake amount was disproportionate and commercially unviable.
The issue had intensified after the GST Council in 2023 decided to impose 28% GST on the full face value of online gaming, casinos and horse racing. The Revenue department had maintained that the amendment merely clarified the existing legal position, while gaming companies had argued that the levy could not be applied retrospectively for periods before October 1, 2023.
The total tax demands against the industry had initially stood at approximately Rs 1.12 lakh crore, with potential exposure increasing significantly after the addition of interest and penalties. Some reports had later estimated the total exposure at around Rs 2.5 lakh crore.
One of the lead matters involved Gameskraft Technology, which had received a GST notice of nearly Rs 21,000 crore. The department had alleged that the company was liable to pay 28% GST on betting volumes of around Rs 77,000 crore generated through platforms including Rummy Culture, Gamezy and Rummy Time.
Gameskraft had challenged the notice before the Karnataka High Court, which had ruled in the company’s favour by 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 had subsequently appealed before the Supreme Court, which stayed the High Court ruling in September 2023 after the department argued that the judgment had impacted similar proceedings against other gaming companies.
The batch of cases before the apex court had raised broader questions regarding whether online skill games played for stakes could be treated as betting or gambling for GST purposes, whether the 2023 amendments were clarificatory in nature, and whether retrospective tax demands could be enforced. The Court has now held that the amendments were clarificatory.
The Supreme Court had earlier stayed GST proceedings against gaming companies in December 2024 after the Centre informed the Court that certain show-cause notices would continue through February 2025. That interim order has now been vacated. The matter had been reserved for judgment in August 2025.
The ruling may also impact ongoing challenges by online gaming companies against laws banning real-money games in India.
The gaming companies have been 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 has been represented by Solicitor General Tushar Mehta and Additional Solicitor General N Venkataraman.
