Supreme Court upholds 28% GST on gaming, >1 lakh crore tax

The Supreme Court has upheld the government's authority to impose a retrospective 28 percent Goods and Services Tax (GST) on online gaming companies, a ruling that establishes the sector's activities as taxable betting and gambling and creates a potential tax liability exceeding one lakh crore rupees. The decision, delivered on Wednesday, concludes a major legal challenge from the industry and fundamentally alters its financial and regulatory landscape.

The court ruled that online gaming platforms are not mere intermediaries but suppliers whose activities give rise to taxable actionable claims. A bench stated that online gaming, including fantasy sports, constitutes betting and gambling for GST purposes once a stake is placed, dismissing industry arguments distinguishing games of skill from games of chance. The judgment also upheld the constitutional validity of the tax levy.

This ruling supports tax authorities' position that the full face value of bets placed on these platforms is taxable, not just the platform's commission fee. Prior to a GST Council clarification in August 2023, the industry paid GST at 18 percent on its platform fees. The Council's decision clarified the 28...