Gaming companies are facing GST demands of around Rs 1 lakh crore, as per a Business Today report of 27 May 2026, after the Supreme Court upheld the 28% GST on online gaming on the full value of deposits, with retrospective effect that covers periods before 1 October 2023. The Indian Eye reports that the court also decided that the difference between games of skill and games of chance does not change the tax position once a player has staked cash.
The levy had started on 1 October 2023. Parliament had passed the amendments to the CGST and IGST laws in August 2023 and the GST Council had approved the rate at its 51st meeting in the same month, as reported by Zeebiz and Tribune India.
Tax is on the amount paid in, not the platform fee
Under Rule 31B, the taxable value of online gaming is the total amount a player pays or deposits with the supplier, and this includes virtual digital assets, as per a news note by Foxmandal on the Finance Minister's clarification. The platform's own fee does not decide the base.
Earlier, the online gaming portals were paying 18% on the platform fees they charged, which was the gross gaming revenue base, as Deccan Herald had reported. The base was therefore only a part of what the players were putting in, and now the full amount is counted.
Casinos and horse racing follow same approach in their own forms. For casinos, the tax is on the face value of chips bought, and for horse racing, it is on the bets placed with a bookmaker or totalisator, as per Zeebiz.
What is excluded and the 40% rate
If a player keeps the winnings in the account and uses them in a later game without withdrawing, the amount is not counted again in the taxable value, as per the Foxmandal news note. The Finance Minister had said this exclusion applies only from 1 October 2023 and not retrospectively.
Offshore online gaming operators supplying to Indian players have been required to register for GST since 1 October 2023.
The rate on online money gaming, betting and casinos was raised to 40% from 22 September 2025, and online money games have been banned since 1 May 2026 under the Promotion and Regulation of Online Gaming Act, 2025.
