The Court explained that the crucial factor is the presence of stakes on uncertain outcomes, regardless of whether the game involves skill or chance. This means even skill-based games become subject to GST when participation involves money placed on uncertain results. As a result, online gaming platforms generating actionable claims through pooled stakes and contingent prize structures are considered suppliers under GST laws, not mere intermediaries.
Previously, online gaming companies paid GST only on their commission from bets, typically 18% on the platform fee. However, tax authorities argued that GST should apply to the entire amount staked by users, significantly increasing the tax burden. To address this, Parliament amended the law in 2023 to impose a 28% GST on the full value of bets or deposits, not just on the platform’s revenue.
The Court upheld this amendment, stating the GST levy is on the taxable supply of actionable claims arising from betting and gambling, supported by the Central GST Act and the Constitution. It rejected challenges claiming the tax was unconstitutional or retrospective.
This decision settles a major dispute in the digital economy, where tax demands against gaming companies had reached over ₹1 lakh crore. The ruling confirms that online gaming activities involving stakes are taxable under GST, marking a significant development for the industry and the government’s tax framework.
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