Gameskraft served show cause notice for Rs 21,000 crore GST

India's Central Board of Indirect Taxes and Customs confirmed that Gameskraft, a Bengaluru-based online gaming platform, was served a show cause notice in September 2022 for recovery of Rs 21,000 crore in Goods and Services Tax¹. The demand concerned alleged GST evasion, with authorities claiming the company should have paid 28% tax on the full value of stakes placed by players rather than a lower rate on its platform commission alone².

Gameskraft challenged the notice at the Karnataka High Court, which quashed it, agreeing that platforms were technology intermediaries rather than gambling operators². The revenue department then filed a Special Leave Petition in the Supreme Court in July 2023, and the Supreme Court stayed the High Court order, listing the matter for a hearing on October 10¹.

The notice was part of a wider enforcement push. CBIC chairman Sanjay Kumar Agarwal said on September 28, 2023 that such notices were being issued according to law and were based on data analysis¹.

Casino operator Delta Corp received a notice the previous week for alleged short payment of taxes worth Rs 16,800 crore, and online gaming company Dream11 also received a notice¹. The GST Council had approved amendments in July and August 2023 to treat online gaming, casinos and horse racing as taxable actionable claims, attracting 28% GST on full bet value¹. The Finance Ministry notified October 1, 2023 as the appointed date for the amended Central GST and Integrated GST provisions to take effect³. The amendments made registration mandatory for offshore online gaming platforms and provided for blocking access to those that failed to comply³.

Around 15 states had yet to amend their State GST laws at the time of the October 1 notification, which the All India Gaming Federation said created uncertainty over whether companies in those states should charge central GST without state GST³.

What it means for players

The notices and the amended tax provisions concern how operators are taxed, not whether individuals may play. The 28% rate applies to the full face value of bets rather than the platform's commission, a change that affects operator margins and pricing³. Players in states that had not amended their own GST laws faced a period in which the tax treatment of deposits was unclear, and the industry body representing operators asked the government for time to adjust³. The outcome of the Gameskraft case before the Supreme Court had not been decided at the time of these reports¹.

What happens next

The Supreme Court listed the Gameskraft matter for hearing on October 10, 2023¹. A review of the implementation of the amended GST provisions was proposed after six months, in April 2024¹. For the wider legal position on gambling in the country, see Can I Gamble in India? and Gambling Laws in Asia: What Is Legal in 12 Jurisdictions.