Skill or Chance Irrelevant If Money Is Staked: SC Upholds 28% GST on Online Gaming

The Supreme Court on Wednesday upheld the government’s retrospective levy of 28 per cent GST on online gaming companies , ruling that the taxation framework is constitutionally valid and that real-money gaming activities fall within the scope of betting and gambling under the GST regime.

A bench of Justices J B Pardiwala and R Mahadevan held that online gaming platforms are not mere intermediaries but suppliers under GST law . The court observed that games involving staking on uncertain outcomes amount to betting and gambling, and ruled that once money is staked, the distinction between skill-based and chance-based games becomes irrelevant for tax classification.

Quoting the bench, the court said, “ Online gaming activities, including fantasy sports and other games played on digital platforms, involving staking upon uncertain outcomes, constitute betting and gambling for the purpose of GST framework. ” It added that the levy on actionable claims arising from such activities is valid and does not violate constitutional provisions under Articles 366(12) and 366(12A) .

The court further held that there is no fundamental right to engage in betting or gambling , treating such activities as res extra commercium , outside protection of Article 19(1)(g) . It also upheld state powers to regulate and ban such games, citing concerns over addiction, financial distress, and reported suicides linked to real-money gaming .

In a key ruling, the bench upheld laws by Tamil Nadu and Karnataka banning online games played for stakes, including rummy and poker, and set aside earlier High Court judgments that had struck them down.

The court also upheld the GST Council’s 2023 decision to impose 28 per cent GST on full bet value, including its retrospective application , and validated rules requiring overseas gaming firms to register in India from October 2023.

The case arose from multiple GST show-cause notices issued in 2023 and consolidated for a final ruling. The judgment impacts firms including Games 24x7, Head Digital Works, and Federation of Indian Fantasy Sports , with enforcement and adjudication now expected to proceed.