The Supreme Court on Wednesday (May 27, 2026) confirmed the constitutional validity of bringing organised online gaming activities with money stakes under the Goods and Services Tax (GST) regime.
The Supreme Court has delivered a significant judgment upholding the constitutional validity of levy of Goods and Services Tax (GST) on online gaming activities involving monetary stakes. In Directorate General of Goods and Services Tax Intelligence Headquarters v. Gameskraft Technologies Private Limited (SLP(C) Nos. 19366-19369 of 2023), the Court ruled that online gaming platforms involving pooled stakes and uncertain outcomes fall within the ambit of “betting and gambling” for the purposes of GST legislation.
The Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan held that the determinative factor for classification as betting and gambling is not whether the underlying game is one of skill or chance, but whether money or money’s worth is staked upon uncertain future outcomes. Consequently, even skill-based games such as fantasy sports, poker or rummy may attract GST as betting and gambling once participation involves staking of money.
The Court further held that organised online gaming platforms create actionable claims in favour of participants, which constitute taxable supplies under Section 7 of the CGST Act. Rejecting the argument that gaming operators merely act as intermediaries, the Court observed that such operators themselves supply actionable claims through the gaming ecosystem maintained and controlled by them. The amounts deposited or staked by players were accordingly treated as “consideration” under Section 2(31) of the CGST Act.
Upholding the statutory framework, the Supreme Court affirmed that levy of GST on actionable claims arising from betting and gambling transactions is constitutionally valid and does not violate Articles 265, 366(12) or 366(12A) of the Constitution. The Court also reiterated that fiscal legislation cannot be invalidated merely because it increases tax burden or adversely impacts commercial profitability.
The controversy had arisen due to differing interpretations regarding valuation of online gaming transactions. Prior to the 2023 amendments, gaming companies generally discharged GST at 18% on platform fee or Gross Gaming Revenue (GGR). However, the tax authorities contended that GST was payable on the entire face value of bets or deposits made by players. Subsequently, the CGST Act was amended in 2023 to specifically provide for levy of GST at 28% on the full value of deposits in online money gaming.
The judgment is expected to have far-reaching consequences for the online gaming industry, especially in relation to pending tax disputes and valuation of gaming transactions under the GST regime.
