The recent Goods and Service Tax (GST) Council meetings recommended that actionable claims supplied in casinos, horse racing and online gaming may be taxed at the rate of 28% on full face value, irrespective of whether the activities are a ‘game of skill’ or ‘game of chance’ and proposed amendments to the Central Goods and Services Tax Act, 2017 (GST Act) to provide for taxation of the same.


To give effect to the recommendations made at the GST Council meetings, the GST Act has been amended with effect from October 1, 2023 to provide for the legislative framework for taxation of online gaming:

  • definition ascribed to ‘online gaming’ and ‘online money gaming’;
  • ‘specified actionable claim’ defined to mean betting, casinos, gambling, horse racing, lottery or online gaming and ambit of ‘actionable claims’ has been narrowed down in Schedule III of the CGST Act (which enlists transactions which are not treated as supply for GST imposition) to exclude such specified actionable claims;
  • definition of ‘supplier’ enlarged to person who organizes or arranges, directly or indirectly, supply of specified actionable claims which would also include person who operates or owns or manages a digital or electronic platform for such supply regardless of the nature of consideration; and
  • person supplying online money game from a place outside India to Indian persons are compulsorily required to obtain GST registration.


Based on the amended legislation, online gaming companies are required to charge a 28% GST on the full value of bets from October 1, 2023. Specific provisions for valuation have been introduced to provide that the amount deposited with the online gaming companies would be subject to the 28% GST rather than to the gross gaming revenue.


The above changes in law have severely impacted the online gaming industry, with GST show-cause notices (SCN) with huge tax demands being issued to online gaming companies. Various pleas challenging the GST demand notices are presently pending before the hon’ble Supreme Court of India which may also examine the very constitutional validity of the government’s imposition of a 28% GST on online gaming companies amongst issues surrounding the imposition: retrospective applicability, ambit of actionable claims, valuation methodology, et al.