28% GST on Online Gaming: Where the Supreme Court Battle Stands
The issue of 28% GST on online gaming is back in the spotlight. On July 25, 2025, the Supreme Court of India will hold a final hearing in the landmark Gameskraft case. At stake: whether online gaming companies must pay 28% GST on full bet value retrospectively—from 2017 onwards.
This has massive implications for the gaming industry, especially in the wake of ₹1.5 lakh crore tax notices already issued under Rule 31A of CGST Rules, 2017.
Why Is the 28% GST on Online Gaming Being Challenged?
At the heart of the issue is Rule 31A(3) of the CGST Rules, 2017. It was originally meant for lottery, betting, and gambling, but tax authorities extended it to cover skill-based online games too.
Here’s how the industry is contesting it:
- Skill-based games like rummy and fantasy leagues are not “betting or gambling.”
- GST should apply only on platform fees (gross gaming revenue), not on the full bet amount.
- Retrospective tax demands (2017–2023) are excessive and legally questionable.
The Karnataka High Court had earlier quashed the ₹21,000 crore notice on Gameskraft, calling Rule 31A inapplicable to games of skill. But the Union of India appealed to the Supreme Court, which stayed the HC order.
What Happens on July 25?
The Supreme Court’s Constitution Bench is now set to deliver clarity. Key questions before it:
- Is Rule 31A(3) ultra vires the CGST Act for applying to online skill gaming?
- Can retrospective tax demands be justified under GST law?
- Should “games of skill” and “games of chance” be taxed identically?
If the Court rules in favour of the government, online gaming platforms may owe thousands of crores in back taxes.
Legal and Regulatory Timeline
| Date | Key Development |
|---|---|
| Aug 2023 | GST Council recommends 28% GST on online gaming, casinos, and horse racing. |
| Oct 2023 | Amendments notified in CGST and IGST Acts to define “online money gaming.” |
| Dec 2023 | GSTN releases new registration category for online gaming. |
| Jan 2024 | Gameskraft ruling stayed by Supreme Court. |
| July 2025 | Final hearing scheduled on retrospective GST applicability. |
Source: GST Council Meeting Press Release, CBIC Notifications, Supreme Court cause list.
Expert View: The Real Risk is Retrospective
According to indirect tax experts, the real concern isn’t the 28% GST rate itself—that’s already in effect from 1 October 2023 for all real-money gaming.
The real issue is:
“Retrospective taxation based on a delegated rule is bad in law. Unless the Act itself authorises such retrospective recovery, demands raised for past years may not stand judicial scrutiny.”
This view echoes earlier judgments like Skill Lotto Solutions and Sunrise Associates, which held that games of skill merit different tax treatment.
What Should Gaming Startups and Platforms Do Now?
Until the SC ruling, companies should:
- Review tax positions from 2017 onwards
- Maintain documentation on game classifications (skill vs chance)
- Consider provisional payments under protest
- Prepare for possible settlement or litigation depending on verdict
FAQs
Q1. Is 28% GST on online gaming already in force?
Yes, from 1 October 2023, for all real-money gaming platforms (skill or chance).
Q2. Can GST be demanded for past years before 2023?
That’s the exact question being decided in the Gameskraft case. As of now, the answer is legally unsettled.
Q3. What’s the difference between GGR and full bet value?
GGR = Gross Gaming Revenue (platform commission).
Full bet value = Total money staked by users. The government wants tax on the latter, which is much higher.
Summary
28% GST on online gaming faces final Supreme Court hearing on July 25, 2025. Verdict will decide if retrospective tax from 2017 is legal and whether Rule 31A applies to skill-based games.
Final Word: Watch This Space
The Gameskraft verdict will shape the future of India’s booming online gaming industry. Whether you’re a startup, platform owner, or investor, this judgment is a tax precedent to watch.
Need help with GST notices or compliance? Talk to Efiletax today – your trusted partner for indirect tax, representation, and startup advisory.