Analysis Of The Legislative Framework Under GST Relating To Online Gaming Industry

Since the pandemic, the online gaming industry has witnessed exponential growth. As the revenue of the industry grew, it came under intense scrutiny by the Tax department. Before 01.10.2023, the online gaming industry was paying 18% Goods and Services Tax ('GST') on the Platform fee charged by them and not on the winning money or deposit amount. W.e.f. 01.10.2023, the GST rate has been increased to 28% and on the full value of consideration for online gaming irrespective of whether the gaming activity is a game of skill or a game of chance.

'Game of chance' v. 'Game of skill'

The Tax department issued notices to various online gaming platforms proposing to levy 28% GST instead of 18% on the ground that these are not 'game of skill' but 'game of chance' and equivalent to betting or gambling. One such notice came to be challenged before the Rajasthan High Court¹. Further, a writ petition seeking to initiate criminal proceedings² against the Platforms and a Public