Gaming firms argue GST for skill-based games in India’s Supreme Court
Gaming companies on 8 May presented their legal arguments before the in a case concerning the applicability of 28 percent of Goods and Services Tax (GST) on online games involving monetary stakes. The proceedings are part of an ongoing challenge to a retrospective tax demand and is estimated to have a financial impact of of ₹2.5 lakh crore ($30.1 billion), which includes online gaming platforms, fantasy sports operators, casinos, and racecourses.
Skill vs gambling
A two-judge bench of Justices J.B. Pardiwala and R. Mahadevan is hearing the matter. Senior advocates Gopal Sankaranarayanan and Dr. Abhishek Manu Singhvi appeared for gaming company Gameskraft. They submitted that Indian courts have historically distinguished games of skill from gambling.
Dr. Singhvi referred to previous Supreme Court rulings, including the 1968 Satyanarayana judgment, stating that the references in that case dealt with external betting and not the game of rummy itself. He submitted that games such as chess, rummy, and bridge have been recognised in various judgments as skill-based, according to a report by Storyboard18.
Arguments on presence of stakes
Dr. Singhvi submitted that the inclusion of stakes in a skill-based game does not change its classification under law. Senior advocate Harish Salve, also representing industry interests, offered a hypothetical example comparing skill-based games played for stakes to friendly competitions involving minor wagers. Justice Pardiwala responded during the hearing with a brief remark indicating that casual wagers are unlikely to be considered taxable under GST.
Industry body submissions
Senior advocate Dhruv Mehta, appearing for the All India Gaming Federation (AIGF), began his submissions before the bench. Mehta stated that the gaming sector includes a range of games and platforms. He submitted that determining whether each game is a game of skill or chance would require a case-by-case approach and should be handled by adjudicating authorities.
Mehta also informed the court that member firms of AIGF have been paying GST under Service Accounting Code (SAC) 998439, which includes online card games. He referred to the 2023 amendments to GST law that introduced the term “online money gaming” under the category of “specified actionable claims.”
Background and next steps
The Supreme Court began hearing the matter on 5 May. The case concerns the classification of online games involving real-money stakes under the GST regime and whether such games fall under the legal definition of gambling. The matter is scheduled to continue on 9 May, with further arguments expected from Mehta and other counsels.
