India’s tax intelligence agency, the Directorate General of GST Intelligence (DGGI), has reportedly told the Supreme Court that online gaming companies are essentially involved in betting and gambling. As a result, the agency points out that since those activities fall under that category, they should be taxed under the Goods and Services Tax (GST).
According to Zee Business, the statement came as the Supreme Court kicked off an important hearing on Monday (May 5) to decide whether a massive INR 1.12 lakh crore ($13.3 billion) GST should apply to online gaming, fantasy sports, and casinos. The government argued that these activities clearly count as “taxable actionable claims” under the Central Goods and Services Tax (CGST) Act of 2017.
Speaking on behalf of the Centre, Additional Solicitor General N Venkataraman explained to the court that the government isn’t taxing the games themselves, but rather the “speculative outcome” of those games, which, he said, qualifies as gambling. He added, “Whether Rummy is a game of skill or chance has no relevance. These online activities are betting and gambling.”
The ASG argued that any game involving monetary stakes becomes gambling, regardless of skill, citing a Supreme Court ruling that defines games with uncertain outcomes and stakes as betting and gambling.
He pointed out that gaming platforms have been treating their services like any other regular supply and paying 18% GST, but according to the Central GST Act, their activities should actually be taxed at 28%.
India’s gaming platforms oppose gambling-based tax rise
Senior advocate AM Singhvi, representing a gaming platform, pushed back against the Centre’s argument, saying that placing bets doesn’t change the core nature of a game that’s based on skill.
He said: “Is the government saying that the moment money is wagered on chess, it becomes gambling? The character of the game cannot be changed like that.”
The petitioners, which include gaming platforms, casinos and racecourses, say the current tax setup is unfair and even unconstitutional under the country’s equality legislation. They argue it violates their right to equality and the freedom to do business by treating skill-based games the same as games of chance, putting an unfair financial and regulatory burden on them.
India’s online gaming industry, which employs over 100,000 people and is projected to bring in more than $5 billion a year by 2026, is keeping a close eye on the case. One promoter warned that treating monetised games as gambling would be legally wrong and economically damaging.
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