Supreme Court Upholds 28% GST on Online Gaming

The Supreme Court of India upheld the retrospective levy of 28% Goods and Services Tax on online gaming companies on 27 May 2026. The bench of Justice J.B. Pardiwala and Justice R. Mahadevan held that online gaming platforms fall within the GST framework as taxable actionable claims when a stake is placed.

GST on Online Gaming

Goods and Services Tax is an indirect tax levied under the Goods and Services Tax Act, 2017, and it applies to the supply of goods and services in India. The 28% GST slab for online money gaming was introduced through amendments in August 2023 and was treated by the Court as clarificatory in nature.

Retrospective Taxation

Retrospective taxation applies a tax law to transactions completed before the date of amendment. The Court held that the August 2023 GST amendments apply retrospectively and not only from 1 October 2023.

Legal Issues in the Case

The Court rejected the distinction between a game of skill and a game of chance for GST purposes when a monetary stake is involved. It held that online gaming, casinos, and turf clubs can fall within betting and gambling for taxation under the GST law.

Important Facts for Exams

• Article 246A of the Constitution gives Parliament and State legislatures power to make laws on GST.
• GST in India came into force on 1 July 2017.
• Actionable claims are recognised under the Central Goods and Services Tax Act, 2017.
• The Supreme Court set aside the Karnataka High Court ruling in favour of Gameskraft Technologies.

Case and Tax Demand

The judgment dismissed petitions filed by Gameskraft, Games24x7, Head Digital Works, Play Games24x7 Pvt. Ltd, Baazi Networks Pvt. Ltd, and the E-Gaming Federation. The Court also reinstated the September 2022 show-cause notice that demanded about ₹21,000 crore in GST from Gameskraft Technologies.

Financial Exposure

The tax demand on past transactions in the online gaming sector has been estimated at nearly ₹1.5 trillion. The ruling affects online gaming companies, casinos, and turf clubs that accepted stakes in games before the 2023 amendment.