GST on Online Gaming: Gameskraft Case Enters Day 25 in SC
The Gameskraft GST case has become the most watched tax litigation in India’s online gaming industry. On Day 25 of the Supreme Court hearing (August 5, 2025), the Additional Solicitor General (ASG) defended the government’s stand: that gaming platforms supply actionable claims, and are thus liable for 28% GST under the law.
This blog breaks down the legal arguments, implications for the sector, and what the Court’s decision could mean for gamers and gaming startups in India.
What Is the Gameskraft GST Case About?
Gameskraft, a leading online gaming company, received a massive GST demand of ₹21,000 crore from the Directorate General of GST Intelligence (DGGI), classifying their platform games as “betting” under Rule 31A of the CGST Rules.
The Karnataka High Court quashed this demand in 2023, holding that skill-based games like rummy do not fall under “betting and gambling.” The Union of India appealed, leading to the ongoing Supreme Court proceedings.
What Happened on Day 25?
Key ASG Argument: Supply of Actionable Claims
The ASG (Additional Solicitor General) argued that:
- Online platforms like Gameskraft supply actionable claims between players.
- This qualifies as a “supply” under Section 7 of the CGST Act.
- Hence, they are liable to pay GST at 28% under Notification No. 11/2017-CT (Rate) as amended.
What Are Actionable Claims in GST?
According to Section 2(1) of the CGST Act, actionable claims are excluded from GST except betting, gambling, and lottery.
But what is an actionable claim?
- Defined under Section 3 of the Transfer of Property Act, 1882
- It refers to a claim to an unsecured debt or a beneficial interest in movable property not in possession.
The ASG’s position: when a player deposits money into an online gaming pool, and competes for winnings, that amounts to an actionable claim being supplied on the platform.
Key Legal Provisions Cited
| Provision | Explanation |
|---|---|
| Section 7, CGST Act | Defines ‘supply’ to include all forms of supply of goods or services. |
| Rule 31A, CGST Rules | Special valuation rule for betting, gambling, and lottery. |
| Section 2(52) | Goods include actionable claims, except those specifically excluded. |
| Section 2(17) | Business includes provision of facilities by gaming platforms. |
Gameskraft’s Counterpoint (From Earlier Hearings)
- The games offered (like rummy) are skill-based, not gambling.
- Skill games are protected by earlier SC rulings (e.g., State of Andhra Pradesh v. K. Satyanarayana, AIR 1968 SC 825).
- Rule 31A applies only to gambling, not to platforms facilitating skill games.
Expert Insight: Why This Matters for the Industry
The outcome of this case may:
- Decide the future of India’s booming online gaming sector
- Create GST exposure risks for other platforms like Dream11, MPL, etc.
- Impact player engagement and taxation of winnings
- Set clarity on what qualifies as supply of actionable claims under GST
Tip: Online gaming startups should review their business models in light of this case. It’s not just about whether the game is of skill or chance—it’s also about how the platform’s role is interpreted under GST law.
What’s Next?
- The Supreme Court is expected to hear rebuttals from Gameskraft’s legal team next week.
- Final judgment may settle the conflict between Rule 31A and constitutional guarantees for skill-based activities.
- Sector stakeholders are hoping for clarity on retrospective GST liability.
Summary
The Gameskraft GST case in the Supreme Court examines if gaming platforms supply actionable claims and are liable for 28% GST. The ASG supports the tax, citing Rule 31A. Outcome will impact India’s online gaming sector and define GST scope on skill-based digital games.
FAQs
Q1. Why is GST being demanded from Gameskraft?
Because the DGGI classified platform games as gambling, liable for 28% GST under Rule 31A.
Q2. Are skill games exempt from GST?
Not exempt. But platforms argue that GST on full bet value is unfair for games of skill.
Q3. What is Rule 31A?
It deals with valuation for GST on gambling, betting, and lottery — central to the dispute here.
Q4. Will this impact all gaming platforms?
Yes, especially if the Court rules that platforms “supply actionable claims” under GST.
Final Word
The Gameskraft GST hearing is not just a tax case — it’s a test of how India balances digital innovation, regulatory clarity, and tax enforcement.