No difference between skill and chance in GST levy, Centre tells SC
May 5, 2025
Centre argues before Supreme Court that betting on game outcomes is gambling and attracts 28% GST, regardless of whether the game is based on skill or chance
The Centre on Monday told the Supreme Court that it makes no distinction between online games of skill or chance when it comes to taxation under the Goods and Services Tax (GST) law.
The court was hearing pleas filed by online gaming companies challenging the 28 per cent GST on all forms of online real-money gaming.
The Centre argued that any form of betting on an outcome falls under gambling, regardless of the nature of the underlying game.
The classification of a game—whether it is skill-based or chance-based—is irrelevant for determining tax liability, the central government told the apex court.
Even states such as Nagaland, which offer legal protections to games of skill, treat betting on the outcome of such games as gambling, the Centre submitted.
Drawing a parallel with international fantasy football bets—where people wager on how many goals a particular football player will score but have no control over the outcome—the Centre stated that such activities entice players with potential rewards, which could foster addictive behaviour.
The case is likely to be heard again on Tuesday.
In an earlier hearing, the court had directed the Centre and the GST department to file their responses to the pleas by online gaming companies.
The bench had then issued notices in petitions filed by companies such as Head Digital Works, Games24x7, and Dream11, challenging the government’s decision to retrospectively impose the 28 per cent GST on the full value of online bets placed, instead of on the gross gaming revenue.
The GST department has also sought to transfer all related cases from various high courts to the Supreme Court.
Traditionally, the online gaming industry had been paying GST at 18 per cent, treating its activity as a service. This interpretation was disputed by the GST authorities, who chose to characterise the activity as betting and gambling, thereby subject to 28 per cent GST.
[The Business Standard]
