AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
Supreme court has in its judgment on 27 May, 2026 in bunch of writ petitions / appeals in relation to levy of GST on online gaming activities, has upheld the levy of GST @ 28% retrospectively on the full face value of bets placed true in real money gaming (RMG) platforms. [Directorate General of GST Intelligence v. Gameskraft Technologies Pvt. Ltd. - Case/Writ Numbers: SLP (C) No. 19366-19369 of 2023] In yet another case, it has held that State Governments have a right to enact laws to prohibit online money gaming in their state jurisdictions. Centre has already enacted the new regulation i.e., Promotion and Regulation of Online Gaming Rules, 2026 w.e.f. 01.05.2026.
According to one estimate, there is an outstanding demand of around Rs. 92,000 crores for online gaming and about Rs. 17,000 crores for casinos, besides levy of interest and penalties. The major players in this sector include, inter alia, Dream Sports, Gameskraft, Delta Corp, Games 24x7 etc.
Apex court has over ruled the Karnataka High Court judgment which was in favour of gaming companies where in it was held that 'rummy' was a game of skill and as such firms offering such game was not a supplier of actionable claim so as to be subjected to levy of GST. [Gameskraft Technologies Private Limited, Ramesh Prabhu, Mr. Prithvi Raj Singh, Mr. Deepak Singh, Mr. Vikas Tanjea, Mr. Deepak Jha Versus Directorate General Of Goods Services Tax Intelligence, New Delhi, Additional Director General Director General Of Goods Of Services Intelligence (Headquarters), Senior Intelligence Officer Directorate General Of Goods And Services Intelligence (Headquarters) Central Board Of Indirect Taxes & Customs, Principal Additional Director General Directorate General Of Goods And Services Intelligence and Others - 2023 (5) TMI 926 - KARNATAKA HIGH COURT]
The Apex Court held has follows as per detailed judgment (not yet uploaded):
- The Court upheld the constitutional validity of levying a 28% Goods and Services Tax (GST) on the full value of the bets and ruled that the tax applies retrospectively.
- There is no constitutional infirmity in levying GST on online games and as such is declared valid.
- Levy of GST is constitutionally valid and did not violate the constitutional framework governing GST. It does not transgress Articles 366 (12) and 266 (12A) of the constitution.
- Betting and gambling fall within the category of 'res-extra commercium', or activities outside the protection of ordinary trade and commerce, and, therefore, can not be claimed as a fundamental right.
- Online gaming platforms involving pooled stakes and uncertain outcomes fall within the ambit of 'betting and gambling' for tax purposes.
- 28% levy of GST on full face value of bets is valid.
- Court has ruled that tax shall be payable @ 28% on full value with retrospective effect along with interest and penalties.
- Gaming entities are not merely facilitators or intermediaries but engaged in supply of services as suppliers of actionable claims and therefore, liable to charge and payment of GST.
- Skill based games also acquire character of betting for purpose of GST as money is at stake on uncertain outcomes.
- Ruling also validates GST rules for determination of taxable supplies in case of betting, lotteries, gambling, horse race and casinos.
- Amendments in law w.e.f. 01.10.2023 validating levy of GST are clarificatory in nature and would operate retrospectively.
- 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 frame work.
- In October 2023, GST Council had recommended GST @ 28% on full value of online gaming bets.
- SC also commented that:
- Addiction to online betting was creating disturbance on social tranquility.
- Government can decide on banning such activities to protect public health.
- Online gaming companies cannot claim violation of fundamental rights to practice trade.
- Betting and gambling does not need any protection and states are competent to frame laws to curb the mischief of betting and gambling.
- Online gaming has adverse effect on society and its addition causes depression among people.
*************