Gaming Shares Slide After Supreme Court Upholds 28% GST On Online Gaming

Shares of listed gaming companies came under heavy pressure on Friday after the Supreme Court upheld the retrospective levy of 28% Goods and Services Tax (GST) on online gaming platforms.

Delta Corp led the losses among gaming-related stocks, falling as much as 16% to an intraday low of ₹68 on the BSE. Nazara Technologies also declined 3.5% during the session to touch ₹279.35.

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The verdict is considered significant for the online gaming industry, which has been contesting the tax treatment of real-money gaming platforms since 2023.

Supreme Court Backs Retrospective GST Levy

The apex court ruled that online gaming companies cannot be treated merely as intermediaries under GST law. Furthermore, it was noted that games played with monetary stakes constitute actionable cases and would thus fall under the purview of GST in the betting and gambling classification.

The order further added that modifications made in an attempt to legalize the tax imposition were merely clarificatory in nature and could thus be applied retroactively.

The conflict started after the tax department issued notice of tax demands to multiple gaming firms, which included an estimated ₹21,000 crore demand from Gameskraft in 2023.

Online gaming firms had contended that online games requiring skills should not be considered betting and gambling games. In addition, they stated that the operator merely acted as a facilitator of the competition and did not have any claim on the prize pool or player stakes.

GST Demands Exceed ₹1 Lakh Crore

As per statements made before the court, total GST demands served to gaming firms were close to ₹91,684.81 crore. Including casinos, the overall tax exposure rises to around ₹1,08,505 crore.

The Centre had amended GST provisions in August 2023, making it mandatory for overseas gaming firms to register in India from October 1, 2023.

Several companies and industry bodies, including Delta Corp, Play Games24x7, Head Digital Works and the E-Gaming Federation, had challenged the retrospective tax demands.

Authorities argued that the full “buy-in” amount paid by players for participating in games qualified as an actionable claim liable for GST. Gaming firms, however, contended that only gross gaming revenue should attract taxation.

Industry Faces Financial Impact

Karthik Mani, Partner and Leader – Indirect Tax (South), Tax & Regulatory Advisory at BDO India, said the ruling could significantly reshape the economics of India’s online gaming industry.

According to Mani, the Supreme Court held that once real money is staked on uncertain outcomes, the distinction between games of skill and games of chance becomes irrelevant for GST purposes.

The judgment consolidates tax demands against several major gaming platforms, including Gameskraft, Dream11 and MPL, with the overall liability estimated at more than ₹1.3 lakh crore.

The ruling is expected to increase financial pressure on gaming operators as companies assess the impact of retrospective tax liabilities and future compliance requirements.