The Supreme Court of India temporarily halted, last Friday, Goods and Services Tax (GST) show-cause notices amounting to Rs1.12 trillion ($13.5 billion) issued to online gaming companies.
According to a Business Standard report, the court has ordered the suspension of all proceedings related to these notices until a definitive resolution is reached. It has also instructed the consolidation of cases involving multiple gaming companies, with the next hearing scheduled for March 18th, 2025.
The dispute centers on the interpretation of GST applicability to online gaming. The government argues that a 28 percent GST should be levied on the total entry fee for contests, effectively taxing the entire prize pool. In contrast, gaming companies assert that GST should apply only to their platform fees or commissions, noting that many games are skill-based rather than chance-driven.
Saurabh Agarwal, Tax Partner at EY, stated that the upcoming final hearing in March will be crucial in shaping the regulatory framework and ensuring a fair and transparent taxation system for the industry.
Agarwal also highlighted that the Supreme Court’s decision to stay proceedings on the notices from the Directorate General of GST Intelligence (DGGI) is a significant development for the online gaming and casino sectors. He emphasized that this move underscores the need for legal clarity and due process, especially in industries undergoing rapid growth and regulatory change.
Following the decision, Indian gaming company Delta Corp stocks surged by about 17 percent after the Supreme Court issued a stay on the GST demand.
