Several Indian gaming firms are appealing to the country’s Supreme Court for interim relief from retroactive GST demands, which could result in tax liabilities exceeding their earnings.
According to local media outlet The Economic Times, at least two companies filed interlocutory applications in December, requesting the court to suspend the tax office’s actions until a final decision is made. The dispute centers around the imposition of a 28 percent GST on the entire betting pool for past years, with gaming companies warning that the industry could collapse without temporary relief.
The Goods and Services Tax (GST) department is pursuing retroactive tax claims for the period between January 2018 and September 2023, following a change in GST regulations in 2018 and an amendment to the law in 2023 that included online money gaming. Since October 2023, companies have been paying 28 percent GST on their betting pools, but the new adjudication notices target past years.
The gaming industry is under pressure, with the GST department aiming to convert past show-cause notices into tax demands by February 5th, 2025, creating an urgent deadline.
Legal sources suggest the Supreme Court will hear the case soon, as the gaming sector faces a tense stand-off with the tax office. If adjudication orders are not issued by early February, the tax notices will become invalid. However, pushing through the hefty tax demands could prove fatal for many firms.
The same report also highlights that the case before the Supreme Court covers three critical issues: whether GST can be applied to the full deposit made by gamers; whether it applies retroactively to the period before October 2023; and whether games like poker, rummy, and fantasy sports are classified as games of ‘chance’ or ‘skill.’ If deemed games of chance, these activities could fall under India’s gambling laws, potentially leading to the end of the online gaming industry in the country.
