Why SC’s verdict on retrospective GST levy on online gaming could be a death blow to the sector
The Supreme Court on Wednesday (May 27) upheld the constitutional validity of the government’s retrospective 28 per cent Goods and Services Tax (GST) levy on online gaming companies, delivering a massive setback to the country’s real-money gaming sector. The verdict effectively revives tax demands running into nearly Rs 2.5 lakh crore against gaming firms, fantasy sports platforms and casinos, and could well spell the end of the road for the online gaming sector, already reeling under a ban imposed by the government in 2025.
A bench comprising Justices JB Pardiwala and R Mahadevan dismissed petitions filed by several gaming companies and industry bodies challenging the GST regime and retrospective tax notices issued by authorities. Companies like Dream11 and GamesKraft would be impacted by the judgment.
The dispute centred around the gaming sector’s contention that the 28% GST on online gaming should apply only prospectively, from 1 October 2023, after the amendments approved by the GST Council came into effect. After the GST council approved the new GST rate for the sector, the Directorate General of GST Intelligence (DGGI) had started issuing tax demand notices to such companies, which they alleged were being carried out on revenue earned before the new rates came into effect.
However, the apex court sided with the government’s interpretation and treated the 2023 GST amendments as clarificatory, thereby allowing retrospective application for periods before October 1, 2023.
