More Stories

Informist, Wednesday, May 27, 2026

 

--SC upholds govt retrospective 28% GST levy on online gaming cos 

--SC: Online gaming activities give rise to actionable claims under GST Act 

--SC junks Delta Corp, others' plea on 28% retrospective GST on online games 

 

NEW DELHI – The Supreme Court Wednesday upheld the constitutional validity of the government's law retrospectively imposing goods and services tax at the rate of 28% on online gaming companies on the full value of bets placed and not on the gross gaming revenue. Online gaming activities, including fantasy sports and pool stakes, give rise to actionable claims, constituting taxable supplies within the meaning of the Central Goods and Services Tax Act, 2017, the court said.

 

The character of betting and gambling does not depend exclusively upon whether the underlying activity is a game of skill or chance, but upon the existence of stakes based upon uncertain future contingencies, the bench of Justice J.B. Pardiwala and Justice R. Mahadevan said. Consequently, even where the underlying activities involve substantial elements of skill, once participation is conditioned upon taking money or money's worth upon uncertain outcomes, the resulting transactions acquire the character of betting and gambling within the framework of the GST legislation, the bench said.

 

The legislative scheme embodied in the 2017 Act and the corresponding state enactments validly subject actionable claims arising from betting and gambling to GST, the court said. The provisions embodied in the 2017 Act, in so far as they operate upon actionable claims arising from betting and gambling, are constitutionally valid and clearly traceable to the legislative competence conferred by the Constitution, it said.

 

The court said the concept of "supply" under the 2017 Act is not confined to transfer or pre-existing actionable claims but extends to other forms of supply contemplated under the statutory framework, including organised betting and gambling arrangements within which actionable playing interests arise. The absence of transfer of a pre-existing, actionable claim does not take such a transaction outside the ambit of taxable supply under the GST framework, it said.

 

Organised gaming and betting platforms create and operate a commercial ecosystem within which participants acquire contingent beneficial interest in movable property arising upon participation in betting and gambling, with transactions involving uncertain future outcomes, the court said. Such contingent beneficial interest constitutes actionable claims within the meaning of The Transfer of Property Act, 1882, and, accordingly, fall within the taxable framework embodied in the GST legislation, the court said. Consequently, the amounts paid or otherwise appropriated towards participation in gameplay constitutes consideration and there is no statutory basis for excluding or deducting prize pools, winnings, payouts, or similar components while determining taxable value under the statutory framework, it said.

 

The court said online gaming operators are not mere intermediaries. Facilitating transactions between participants constitutes supplies of such actionable things within the framework of GST legislation in so far as casino transactions are concerned, it said.

 

The apex court rejected petitions by Delta Corp. Ltd., Gameskraft Technologies Pvt. Ltd., and others challenging the government's retrospective levy on the full value of bets placed. It said the correctness of the actual computations, assumptions, notional allocations, and corresponding tax liability shall remain open for reconsideration by the adjudicating authority in accordance with the law and principles laid down in the judgment on the pending show-cause notices, adjudication proceedings, and consequential demands relating to online gaming, fantasy sports, and casino transactions. 

 

The Supreme Court vacated its stay on the proceedings related to the show-cause notices issued to online gaming companies by the Directorate General of GST Intelligence, amounting to almost INR 1.12 trillion. It also set aside the Karnataka High Court's order that had quashed the INR 210-billion show-cause notice to online gaming platform Gameskraft.

 

Earlier, the court had transferred to itself a batch of cases pending before nine high courts on the issue. The top court had tagged these petitions with the pending case of the INR 210-billion show-cause notice issued to Gameskraft by the Directorate General of GST Intelligence. The court was also hearing petitions filed by gaming companies Head Digital Works and Play Games 24x7, besides the E-Gaming Federation of India, on the issue.

 

Most of the show-cause notices were issued after the GST Council in 2023 decided to levy a uniform GST of 28% on the full face value of bets placed on all online gaming platforms. The government believes some of these companies leveraged the lack of clarity on taxation of "game of chance" and "game of skill" earlier. Minister of State for Finance Pankaj Chaudhary had told the Rajya Sabha on Dec. 5, 2023, that the government had issued 71 notices worth a cumulative INR 1.12 trillion to online gaming companies between April 2022 and October 2023.

 

Wednesday, shares of Delta Corp. Ltd. ended at INR 81.05 on the National Stock Exchange, up 9.3% from Tuesday.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.