GST on Online Gaming in India

GST on Online Gaming in India

GST on Online Gaming in India

  • Posted by kalyani
  • On February 5, 2024


N Krishna
Partner - Taxation

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GST on online gaming has been a long-standing subject of debate and has recently taken center stage in legislative discussions. During the previous year, the government passed a bill enforcing a 28% GST for online gaming, casinos, and horse racing, effective from October 1, 2023. All Indian states have unanimously endorsed this action following changes in GST legislation approved by the Lok Sabha. The GST council’s decision aligns with legislative actions addressing GST on the delivery of online gambling services from foreign providers to Indian clients, along with measures to prevent non-compliance and unauthorized access to associated data.  The council suggests that the player’s payments for online gaming should form the basis for taxation, irrespective of whether the games are chance-based or skill-based.

In summary, when an individual deposits Rs. 100 in an Online Fantasy gaming app, Rs. 28 is directly allocated to GST, leaving only Rs. 72 for gameplay where the GST incidence is passed onto the users.  Additionally, the platform fee is deducted as well.  Previously, GST was imposed on the platform fee, not the full gross value.  For instance, if a person deposited Rs. 100 in the online Fantasy gaming app and placed a Rs. 100 bet, including a Rs. 10 platform fee, the 18% GST was applied to the platform fee, amounting to Rs. 1.80. This meant that a person who used to pay Rs. 1.80 as GST for a Rs. 100 deposit (considering the platform fee to be Rs. 10) will now have to pay Rs. 28.

In technicality, there is a crucial distinction in the online gaming industry between games of skill and games of chance, influencing the legal status and regulatory framework for different forms of online gaming. Courts have interpreted “betting and gambling” to refer to games of chance, covered under the Public Gambling Act, 1867, or state gambling/betting laws. Conversely, games of skill, governed by the Information Technology Act, 2000, and Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules, 2021, have consistently been differentiated from gambling and betting by the courts. Courts have affirmed that games of skill do not qualify as gambling/betting and are protected as legitimate business activities under Article 19(1)(g) of the Constitution of India.

Proposed GST amendments

In May 2021, the GST Council formed a Group of Ministers (GoM) to assess the valuation of services offered by Online Gaming (OG), racecourses, and casinos.  The GoM submitted a report during the 47th GST Council meeting, suggesting that OG should be subjected to a 28% tax on the total consideration, specifically the Contest Entry Amount (CEA). Following this, the GST Council advised the GoM to review the recommendations, and the final report was presented in December 2022, with specific details not publicly disclosed.

Illustration 1: Chart: Timeline of amendments proposed under the GST

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Key points from 51st GST Council meeting on 3 August 2023

  • Approval of proposed amendments in the CGST Act, 2017, and IGST Act, 2017, including Schedule III to provide clarity on the taxation of supplies related to:
    • Casinos
    • Horse racing
    • Online gaming
  • The IGST Act will explicitly outline the liability to pay GST for suppliers located outside India who provide online money gaming to individuals in India.
  • Foreign suppliers must register in India, mandating a separate procedure, making registration in India obligatory for offshore gaming companies.
  • GST will be imposed on the valuation of the supply of online gaming and actionable claims in casinos at the entry level.
  • Games of chance and games of skill will be subject to equal treatment for GST levies, with clear definitions provided in the law.
  • Distinct regulations will be formulated for assessing the value of online gaming supplies and actionable claims in casinos.
  • A GST rate of 28% will be applicable to the initial cash or equivalent deposits made by players on an online platform to commence a game, and not on the redeployed winning amounts.
  • GST will be applicable to payments received and winnings paid in Virtual Digital Assets (VDAs) by online gaming companies and casinos, covering both overseas and domestic companies accepting and making payments in VDAs such as cryptocurrency.
  • Amendments and the enforcement of GST on online activities is effective from October 1, 2023.

Valuation of GST on Online gaming

Rule 31B: Valuation of Supply in Online Gaming, Including Online Money Gaming

The value of the supply of online gaming, encompassing actionable claims related to online money gaming, will be the total amount paid or payable to the supplier.  This includes money and virtual digital assets, by or on behalf of the player. Amount returned or refunded by the supplier to the player, for any reason, such as the player not using the amount for participating in any event, will not be deducted from the value of the supply of online money gaming.

Rule 31C: Valuation of Supply of Actionable Claims in Casinos

The valuation of actionable claims in a casino will include the entire amount paid or due by or on behalf of the player. This covers the acquisition of tokens, chips, coins, or tickets for utilization in the casino or participation in any event without the necessity for tokens, chips, coins, or tickets. Nonetheless, any reimbursement or refund made by the casino to the player when returning tokens, coins, chips, or tickets will not be deducted from the value of the actionable claims in the casino.

Explanation: In the context of Rule 31B and Rule 31C, any funds acquired by the player as winnings from one event, subsequently utilized for participation in another event without withdrawal, shall not be regarded as the amount paid or deposited with the supplier by or on behalf of the player.


The online gaming industry in India, having witnessed significant growth, is considered a vital contributor to the digital economy.  However, proposed changes in the GST regime, could pose a threat to the industry’s viability. An online gaming company Delta Corp was recently issued a notice of Rs. 16,800 Cr in tax arrears, an amount that is more than double the company’s last decade’s revenue.  Dream11, on the other hand, has been issued a tax demand of Rs. 25,000 Cr, while its last known public valuation is Rs. 60,000 Cr. Previously, the largest such demand of Rs. 21,000 Cr was sent to Games Kraft Technology.  However, it should also be noted that several of the GST tax demands have been contested by the online gaming companies and are pending resolution before the Courts, the hearing of which is expected shortly.


Effective October 1, 2023, the recent regulatory updates eliminate the differentiation between games of skill and chance. Additionally, the Council has mandated registration for foreign providers engaging in online money gaming.. While the interim budget typically does not make substantive amendments, stakeholders in the online gaming industry were expecting certain amendments/ announcements in this regard, considering the fact that at the stage of introduction of GST on online gaming, it was announced that the levy of GST on online gaming would be reviewed after six months of implementation. However, there have not been any announcements pertaining to the online gaming industry in the interim budget for 2024 and the wait continues towards expecting changes in future GST council meetings.



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