Industry experts said companies may now be forced to restructure operations, cut costs, explore alternative business models or face consolidation amid cumulative GST demands exceeding ₹1 lakh crore. | Photo Credit: ZOHRA BENSEMRA

The Supreme Court ruling upholding GST levy on online gaming companies, which have been slapped with over Rs 1 lakh crore worth of showcause notices under GST, will put pressure on their margins, and survival will hinge on aggressive cost-rationalisation and rapid business model adaptation, tax experts said on Wednesday.

In its judgement on Wednesday, the Supreme Court ruled in favour of the Revenue Department and upheld the 28 per cent (now 40 per cent) GST framework, and recognised stake-based online gaming as betting and gambling for GST purposes.

In August 2023, the GST Council clarified that 28 per cent GST would be levied on the full value of bets placed on online gaming platforms. Since then, a host of gaming companies have received either an intimation notice or a show-cause notice for short payment of Goods and Services Tax (GST), cumulatively amounting to Rs 1 lakh crore.

Thereafter, the companies approached the courts to contest the tax authorities’ claims.

“The Court has fundamentally altered the legal and commercial terrain for gaming operators. Major real-money gaming operators such as Gameskraft, Dream11, Mobile Premier League (MPL), Games24x7, Junglee Games, Delta Corp and several online rummy, poker and fantasy sports platforms are likely to feel the immediate impact of the ruling whether through ongoing tax disputes, business-model recalibration, investor scrutiny, or future compliance costs,” said Nangia Global, Executive Director- Indirect Tax, Sivakumar Ramjee.

AKM Global, Lead- Indirect Tax, Ikesh Nagpal said that going forward, online gaming companies will have to make a hard commercial decision, whether to settle, restructure, or wind down.

“Investors and foreign backers will be reassessing their positions, and fresh capital into the sector will be difficult to attract given the confirmed legal and regulatory headwinds. Some platforms may pivot to free-to-play or advertising-based models to survive, while others may explore offshore restructuring,” Nagpal said.

Industry faces liquidity and compliance pressures

EY India, Tax Partner, Saurabh Agarwal said the Supreme Court’s ruling fundamentally alters the sector’s fiscal landscape.

“Upholding the 28 per cent GST on full face value - especially with retrospective impact - creates an immediate, steep financial burden that cannot be passed on to consumers. As the industry faces a sharp phase of consolidation and liquidity pressures, companies must immediately recalibrate their financial structures. Survival will hinge on rapid business model adaptation, aggressive cost-rationalization, and absolute regulatory alignment,” Agarwal said.

Considering the Rs 1 lakh crore GST exposure of such gaming companies, Ramjee said this is no longer merely a litigation issue, “It is a balance-sheet event”.

The Supreme Court has also dismissed arguments distinguishing ‘Game of Skill’ from ‘Game of Chance,’ holding that online gaming falls within betting and gambling once a stake is placed.

Price Waterhouse & Co LLP Partner Nitin Vijaivergia said this decision is retroactive, meaning it could have an impact for the period even before 2023, when the law was amended.

“As a result, the gaming industry now faces substantial challenges, including significant past tax liabilities along with interest and penalty and the prospect of paying GST at 40 per cent from September 2025,” Vijaivergia said.

The GST rates and slabs were changed, effective September 22, 2025, after which online gaming was placed in the 40 per cent slab.

Tax framework and future outlook

The SC judgment also appears to reject the industry’s long-standing argument that platforms are mere intermediaries earning platform fees.

Ramjee said for the industry, this means sharper regulatory oversight, pressure on margins, possible consolidation, and a likely rethink of prize pool and entry-fee structures in a sector that has so far operated on aggressive growth and investor optimism.

BDO India Partner & Leader - Indirect Tax: South, Tax & Regulatory Advisory Karthik Mani said the ruling consolidates demands against 27 major gaming companies including Gameskraft, Dream11, and MPL, and “puts the sector’s cumulative GST liability at over Rs 1.3 lakh crore, a figure that could fundamentally alter the economics of real-money gaming in India.”

After the GST Council, comprising Centre and State finance ministers, on August 2, 2023, had clarified that 28 per cent GST is leviable on online gaming and casinos on the entire value of bets, the Parliament on August 11, 2023, approved amendments to the Central and Integrated GST laws to levy 28 per cent tax on the full face value of bets in online gaming, casinos and horse race clubs.

Before the clarification, the online gaming industry was paying GST at 18 per cent on platform fees/commission. Such commission varies from 5 to 20 per cent of the full face value of bets.

Published on May 27, 2026