GST on Online Gaming and Casinos in India have faced big changes after the government applied 28% GST. Whether it’s fantasy sports, rummy, poker, or casinos, this high tax rate has created confusion and debate.
Table of Contents
1. Legal Basis of the 28% GST Rule
The 28% GST rate is based on:
- Section 7 of CGST Act, 2017 – Defines “Supply” and covers betting, gambling, and online gaming.
- Section 15 of CGST Act, 2017 – Explains “Value of Supply” (full bet amount / chips value).
- Schedule III of CGST Act – Earlier excluded actionable claims except betting, gambling, lottery – online games now included.
- Notification No. 11/2017-Central Tax (Rate) (amended via Notification No. 11/2023-CT (Rate)) – Specifies 28% GST on betting, casinos, horse racing, and online games.
- Rule 31A of CGST Rules – Special valuation rules for betting, gambling, and horse racing (now extended to online gaming).
2. What is the 28% Rule GST On Online Gaming & Casinos?
From 1 October 2023, all online gaming, casinos, horse racing, and betting attract 28% GST on full face value:
- Online games – GST on total bets placed.
- Casinos – GST on the full value of chips purchased.
It applies to both games of skill and games of chance.
3. Why Did the Government Introduce This Rule?
- To unify the tax rate for all gaming activities.
- To control betting/gambling through stricter regulation.
- To increase tax revenue from the fast-growing gaming sector.
4. How is GST Calculated for Online Gaming? (With Section Reference)
Example:
Player deposits ₹1,000 to play fantasy cricket.
- Value of Supply = ₹1,000 (as per Section 15 read with Rule 31A)
- GST @ 28% = ₹280
- Net play amount = ₹720
Earlier, GST was only on platform fees; now it’s on the full deposit/bet amount.
Steps to Follow for Compliance on GST on Online Gaming and Casinos
Step 1 – Get GST Registration
- Apply for GST under Section 24 of CGST Act (compulsory for online gaming & betting businesses, including foreign companies offering services in India).
Step 2 – Classify the Activity Correctly
- Identify if your service is online gaming, betting, gambling, or casino activity.
- Refer to Notification No. 11/2023-CT (Rate) and Rule 31A for valuation rules.
Step 3 – Calculate Value of Supply
- Take the full value of bets placed / chips purchased (as per Section 15 read with Rule 31A).
- No deduction for platform fees or winnings distribution.
Step 4 – Charge GST @ 28%
- Apply 28% GST on the full value calculated.
- For overseas players, check if IGST applies under Section 12 & 13 of IGST Act.
Step 5 – Issue GST Invoice
- Must contain GSTIN, taxable value, GST rate (28%), and total GST amount.
- For foreign companies, follow OIDAR (Online Information Database Access & Retrieval) rules.
Step 6 – Collect and Deposit GST
- Collect GST from players/customers.
- Deposit monthly via GSTR-3B.
Step 7 – File GST Returns
- GSTR-1 – Report outward supplies.
- GSTR-3B – Pay tax.
- GSTR-9 – Annual return.
Step 8 – Maintain Records
- Keep details of all bets, deposits, withdrawals, winnings, invoices for 6 years as per Section 35 CGST Act.
Step 9 – Respond to Notices
- If you receive DRC-01A or DRC-01, respond within the time limit to avoid penalties under Section 122 & 125.
5. Impact on Online Gaming Companies & Players
- Players: Pay more to play the same games.
- Companies: Higher tax → possible fall in users.
- Foreign Platforms: Must register under Section 24 of CGST Act and follow Indian compliance.
6. Compliance Checklist for Businesses
- GST Registration – Mandatory for gaming companies (Sec 24 CGST Act).
- Charge GST @ 28% – On the full value of bets/chips.
- File Returns – GSTR-1, GSTR-3B, and annual return (GSTR-9).
- Maintain Records – As per Section 35 of CGST Act.
- Pay GST Timely – Avoid interest under Section 50 and penalty under Section 122.
7. Ongoing Disputes & Court Cases
- Industry argues skill-based games should not be taxed like gambling.
- High courts and the Supreme Court are hearing cases against retrospective tax demands.
8. Conclusion
The 28% GST rule under the CGST Act has reshaped online gaming and casino operations in India. While the government views it as necessary for regulation and revenue, it’s clear that businesses and players need to adapt fast.
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