Supreme Court Upholds 28% Retrospective GST On Online Gaming Companies
· Free Press Journal
The Supreme Court on Wednesday upheld the government’s decision to impose a retrospective 28 percent GST on online gaming companies, dealing a major setback to the industry.
The court supported the government’s stand that online gaming companies are liable to pay GST at 28 percent on the full face value of bets placed by users and not just on the platform fee or commission earned by the companies.
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The ruling relates to tax notices worth thousands of crores issued to several online gaming firms by GST authorities.
The government had argued that online real-money gaming falls under betting and gambling activities and therefore attracts the highest GST slab of 28 percent.
ED Arrests Three GamezKraft Founders In Money Laundering Case Linked To RummyCulture And Online Gaming AppsOnline gaming companies had challenged the tax demands and said GST should apply only to the platform fee collected by them, not on the entire amount deposited by players.
Gaming company Gameskraft, represented by Senior Advocate A. M. Singhvi, argued that competitions involving substantial skill cannot be treated as betting or gambling.
Gaming companies also argued that retrospective tax demands would severely affect the sector and create financial stress for businesses operating in the industry.
However, the Supreme Court agreed with the government’s interpretation of the GST law and upheld the retrospective levy.
The judgment could have a major financial impact on online gaming firms because many companies had received large tax notices for previous years.
The decision is expected to strengthen the government’s position in ongoing tax disputes involving online gaming platforms.
DGGI Intensifies GST Scrutiny Of Online Gaming Platforms Amid ₹2.01 Lakh Crore Evasion Detection In 2023-24 FiscalThe GST Council had earlier decided to impose 28 percent GST on online gaming, casinos, and horse racing. The tax is levied on the full value of bets or deposits made by users.
The online gaming industry has repeatedly expressed concerns that the higher tax burden could hurt growth, reduce investments, and impact employment in the sector.
Several gaming companies and industry bodies have argued that games of skill should be treated differently from gambling activities for taxation purposes.
The ruling could now lead to faster recovery proceedings by tax authorities against companies that had challenged the tax demands in courts.