Supreme Court Upholds 28% GST on Online Gaming, Ending Five-Year Dispute

The Supreme Court has resolved a prolonged dispute over GST taxation of online gaming by upholding a 28 percent levy on the full value of gaming and betting transactions. The ruling validates 2023 amendments to GST laws and gives the government a significant victory. Outstanding tax claims, including interest and penalties, valued at nearly Rs 2.5 lakh crore are tied to this matter.

The controversy originated in 2022 when tax authorities challenged an online rummy platform's classification, arguing it should pay 28 percent GST on the entire game amount rather than 18 percent on platform fees alone. The Karnataka High Court had previously favored the gaming company, distinguishing skill-based games from gambling. However, the government appealed this decision to the Supreme Court.

The GST Council's Group of Ministers had recommended treating skill-based and chance-based games uniformly for tax purposes, leading to the 2023 legislative amendments now upheld by the court.