GST on Online Gambling

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July 22, 2023

Why in news?

The GST Council has said that the government will impose a goods and service tax of 28% on the turnover of online gaming companies, horse racing and casinos.

What is the market overview of gaming in India?

  • Online gaming market - The revenue of the Indian mobile gaming industry is expected to exceed 1.5 billion dollar in 2022, and is estimated to reach 5 billion dollar in 2025.
  • While India’s gaming market is currently smaller than the US and China, it is worth about US 1.5 dollar billion and is expected to triple in size to reach US 5 billion dollar by 2025.
  • India’s percentage of new paying users (NPUs) in gaming has been the fastest growing in the world.
  • Types of Online game - Games of skill and Games of chance
    1. A game of skillIt is the one in which a player’s superior knowledge, training, attention, experience, personal traits, and abilities are crucial to success.
    2. Example - Fantasy sports (Dream 11 and MPL fantasy cricket), casual games, and card games (Rummy or Poker)
    3. A game of chanceIt is the one in which chance rather than skill determines the outcome.
    4. Example - Playing cards, roulette, rolling a dice, or even picking a numbered ball are reflected upon as chance-based games.

Online Gaming 2023

What is the decision of GST meeting?

  • The latest provision means that tax will be levied on the entry bet at 28% rather than the earlier tax which is levied on the Gross Gaming Revenue (GGR) at 18%.
  • It is considered to do away with the distinction between game of skill and game of chance, thus, treating all games as demerit goods, thereby attracting a 28% GST rate.
  • The government will bring amendments to the GST-related laws to include online gaming and horse racing in Schedule III as taxable actionable claims.
  •  As per GST, an actionable claim is defined as goods under the Central Goods and Services Tax Act, 2017.
  •  It is a claim to an unsecured debt or a claim to any beneficial interest in movable property that is not in the possession of the claimant.
  • So far, lottery, betting, and gambling were classified as actionable claims. Now, horse racing and online gaming will be added.

All India Gaming Federation (AIGF), founded in 2016, is a self-regulatory apex industry body for online skill gaming in India.

What are the advantages of the move?

  • Transparency - The move will simplify the mechanism, eradicate complexity and imbibe transparency.
  • Check on addiction- The Government quoted that the increase in taxation would reduce children addiction to online gaming.
  • Tax payments - The move would result in a 55% increase in GST payments.

What are the issues in this aspect?

  • Entire gaming industry as gambling- The Government considers the entire gaming industry as gambling, which is not only against the established jurisprudence but may also fall foul of the CGST Act 2017 itself.
  • Even within the games of skill, all the games cannot be equated.
  • Impact on online gambling companies- It will increase the tax burden where the tax exceeds the revenue and boost the growth of illegal gambling platforms.
  • Game of chance vs Game of skill- Under the CGST Act, actionable claims are sought to be excluded from the ambit of GST, except for lotteries, betting and gambling.
  • ‘Betting and gambling’ must be interpreted as betting on a game of chance and not staking or betting on a game of skill.
  • Games of skill vs. Casino games- It is extremely difficult to distinguish between incidence of taxation on casino games with some games of skill like rummy and poker, which are played both online and on the casino floors.
  • Offends Article 14- It offends the fundamental principle that ‘equals are to be treated equally and unequals are to be treated unequally’ and falls foul of Article 14 of the Constitution of India.
  • Against judgements- Various Court judgements have reaffirmed the states of online skill-based games as legitimate business activity protected as fundamental right under the Constitution.
  • Increase in black market activities - The tax could hinder the Digital India Initiative, leading to an increase in black market activities and criminal offences, due to a 400-500% increase in the GST burden.
  • Benefit offshore gambling sites - The change may benefit offshore gambling sites, leading to a significant tax loss for the government and exposing Indian gamers to unregulated websites.
  • Deter foreign investment - The industry also fears that the change could deter foreign investment.


  1. The Hindu| GST on online gambling
  2. India today| Skill based Games
  3. Clear Tax| Online Gambling GST
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