Shares of gaming companies came under heavy selling pressure on Friday, May 29, after the Supreme Court upheld the government's retrospective imposition of 28% Goods and Services Tax (GST) on online gaming platforms. According to reports from LiveMint, Delta Corp emerged as the biggest loser, plunging as much as 16% to an intraday low of ₹68 on the BSE. Nazara Technologies also traded lower, falling 3.5% to an intraday low of ₹279.35. The ruling is expected to have significant financial implications for the sector, which has been locked in a prolonged legal battle over the tax treatment of online gaming activities.
The Supreme Court ruled that online gaming platforms cannot be treated merely as intermediaries and held that such activities create actionable claims under GST law. As reported by LiveMint, the apex court further observed that the legislative amendments validating the tax levy were clarificatory in nature and therefore applicable retrospectively. The ruling comes as a major setback for online gaming companies, which had challenged the retrospective application of the 28% GST levy, arguing that the government's interpretation of "gambling" under GST law was inconsistent with more than six decades of judicial precedents laid down by the Supreme Court and various High Courts.
According to submissions made before the court, the cumulative tax demand raised through show-cause notices amounted to approximately ₹91,684.81 crore for online gaming companies alone. When casinos are included, the total tax demand rises to around ₹1,08,505 crore. As reported by LiveMint, tax experts believe the judgment could fundamentally alter the economics of India's real-money gaming industry. Karthik Mani from BDO India stated that the ruling puts the sector's cumulative GST liability at over ₹1.3 lakh crore, a figure that could fundamentally alter the economics of real-money gaming in India.
The legal battle centered on whether online gaming operators supply actionable claims to players and whether gaming platforms merely function as intermediaries. According to LiveMint, Gameskraft contended that online gaming operators do not supply actionable claims to players and therefore the GST levy was unsustainable. Senior advocate Harish Salve, representing fantasy gaming companies, had argued that the industry was not opposed to a prospective 28% GST levy on the full face value of bets rather than gross gaming revenue. The Centre had also amended GST laws in August 2023, making it mandatory for overseas online gaming companies to register in India from October 1, 2023.
