Supreme Court to Hear Online Gaming Industry's Plea against 28% GST on May 5, 2025
The Supreme Court will hear online gaming companies’ challenge to the 28% GST on real-money games on May 5, 2025
The Supreme Court of India will hear a very important case on May 5, 2025, where online gaming companies have challenged the government’s decision to impose a 28% Goods and Services Tax (GST) on real-money online games. The court has listed the case for final disposal, which means it may give a decision soon after hearing arguments from both sides. The case was heard on April 8, 2025, by...
The Supreme Court of India will hear a very important case on May 5, 2025, where online gaming companies have challenged the government’s decision to impose a 28% Goods and Services Tax (GST) on real-money online games. The court has listed the case for final disposal, which means it may give a decision soon after hearing arguments from both sides.
The case was heard on April 8, 2025, by a bench led by Justice JB Pardiwala. The court said it was ready to hear the matter right away, but the lawyers for the companies said they would need four to five days to present their case, so the court decided to begin the hearing on May 5, 2025. The matter has been officially listed as a motion hearing that could lead to final disposal, meaning the court might not take much longer to decide after the hearing begins.
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Online gaming platforms like Dream11, Games24x7, and Head Digital Works have filed petitions against the tax rule that charges 28% GST on the entire amount placed as bets by users. These companies argue that they should only be taxed on their commission or service fee, known as gross gaming revenue, and not on the full amount that users play with, especially since users often reinvest their winnings in new games. The companies say the rule is unfair, puts a financial burden on them, and harms their business.
The government argues that the change in the GST law that came into effect from October 1, 2023, was only a clarification of an existing rule and not a new law. Therefore, it believes that it can apply the tax to earlier periods as well. This has led to huge tax demands being sent to many companies, including one of Rs. 20,989 crore against Bengaluru-based Gameskraft.
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In May 2023, the Karnataka High Court had cancelled that tax notice, saying the games involved were games of skill, not gambling. But in September 2023, the Supreme Court stayed that ruling, bringing the tax demand back into effect. Later in December, the Supreme Court refused to stop the GST department from collecting the tax, but agreed to hear the gaming companies' arguments in full.
This legal issue became more serious after the GST Council decided that all online games involving real money, whether skill-based or not, should be taxed at 28%, a rate that was previously only used for gambling, casinos, and horse racing. The gaming industry says this has blurred the line between games of skill and games of chance, which has long been recognized by the courts and policymakers.
Senior advocate Harish Salve is representing the online gaming companies, and Additional Solicitor General N. Venkatraman is representing the Centre and the GST authorities. The government has also requested the Supreme Court to transfer all similar cases from different High Courts to itself so that a common and final decision can be made.
This case is very important for India’s growing online gaming sector, which is estimated to be worth over $2.5 billion. The industry has seen fast growth and large investments, and supports jobs, innovation, and digital entertainment for millions of Indians.
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Industry bodies have warned that taxing the entire bet amount instead of just the company’s revenue could lead to major financial problems, job losses, and force users to shift to illegal or foreign gaming websites. Internal reports suggest that the total tax demand raised so far is around Rs. 1.2 lakh crore, which could push several companies to the verge of closure.
On May 5, the Supreme Court is expected to hear detailed arguments on whether skill-based games should be taxed like gambling, whether the retrospective application of the tax is legal and fair, and whether the GST Council’s decision respects the constitutional rights of businesses.
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