The Centre in July filed a Special Leave Petition (SLP) in the Supreme Court against a Karnataka High Court order concerning GamesKraft, and the Supreme Court stayed the High Court order while listing the matter for its next hearing on October 101. The dispute sits alongside a wider tax change: the Finance Ministry late on Friday notified October 1 as the appointed date for amended provisions in the Central GST and Integrated GST laws to come into effect1.
Under the changes to the Central GST Act, online gaming, casinos and horse racing are treated as "actionable claims" similar to lottery, betting and gambling, and are subject to 28% Goods and Services Tax (GST) on the full face value of bets1. The amendments to the Integrated GST (IGST) Act make it mandatory for offshore online gaming platforms to register in India and pay 28% tax under domestic law, and provide for blocking access to overseas online gaming platforms that fail to comply with registration and tax payment provisions1.
The GST Council, made up of finance ministers of the Centre and states, approved the amendments in its July and August meetings, and clarified that such supplies would attract 28% tax on full bet value1. Parliament passed the amendments to the Central GST and Integrated GST laws last month, and rules for valuation by these companies were notified on September 61.
Enforcement has widened beyond GamesKraft. A show cause notice was sent to GamesKraft in September last year for alleged GST evasion of Rs 21,000 crore1. A host of online gaming companies, such as Dream11, and casino operator Delta Corp have received GST show cause notices this month for alleged short payment of taxes1.
The All India Gaming Federation wrote to Revenue Secretary Sanjay Malhotra noting that around 15 states are yet to make changes to their respective State GST laws, and asked what GST treatment companies registered in those states should adopt on deposits from players there1. It requested the Centre to "reconsider these notifications and suspend them till all the states pass their respective amendments, in line with the scheme of GST and the judgment of the Supreme Court of India and in the meanwhile, address the aforesaid issues vide necessary clarifications so that at an operational level, the industry has some clarity and can accordingly align its processes and technology."1
"This is creating a conundrum where the online gaming companies in such states will have to charge CGST but not SGST. At the same time in states where the amendment has been done, both CGST and SGST will be charged."
What it means for players
For anyone betting on online gaming platforms in India, the tax is charged on the full value of the bet rather than on the platform's fee or gross gaming revenue, which changes the cost of every wager1. Offshore platforms that do not register in India and pay the 28% tax face having access to them blocked1. Because around 15 states had not amended their State GST laws at the time of the notification, the tax treatment for players in those states was unresolved, and the industry body said companies there would charge CGST but not SGST1. The status of the GamesKraft matter itself is now before the Supreme Court, which stayed the High Court order1. For the general legal position across the region, see Gambling Laws in Asia: What Is Legal in 12 Jurisdictions and Can I Gamble in India?.
What happens next
The Supreme Court listed the GamesKraft matter for its next hearing on October 101. A review of the implementation of the GST changes was proposed to be carried out after six months, which is April 20241.
