Indian Supreme Court hears operators’ arguments in online gaming tax dispute
Operators oppose the tax, which could result in a ₹2.5 lakh crore (€26.06bn) liability
India.- The Supreme Court of India has held further proceedings adressing the question of whether online skill of games should be brought under the Goods and Services (GST) tax framework in India. On Wednesday, May 14, a two-judge bench of justices JB Pardiwala and R. Mahadevan head from the E-Gaming Federation (EGF). represented by former solicitor general Harish Salve.
Operators oppose the tax, which could result in a ₹2.5 lakh crore (€26.06bn) liability. They argue that Rule 31A was designed for chance-based gaming like betting, horse racing, and lotteries, not skill-based games.
Salve contended that the GST framework incorrectly categorises skill-based games alongside games of chance. He said: “No one is arguing that games of skill can’t be regulated when there’s money involved,” he stated. “But that’s a far cry from claiming that games of skill suddenly become games of chance just because stakes are introduced.”
Salve argued that entry fees for games like rummy and fantasy sports don’t meet the legal criteria for ‘actionable claims.’ Citing the 2006 Sunrise Associates judgment, he said actionable claims typically involve guaranteed or transferable benefits.
Salve said: “Online platforms are facilitators. They don’t offer any actionable claim. There is no guaranteed win, no transfer of rights — just competition among players.”
Salve also challenged tax authorities’ application of Rule 31A, which taxes online game entry fees at 28 per cent on the full transaction value. According to the attorney, this approach is flawed, since online casinos retain only 10 per cent of the entry fee, meaning they are being taxed on revenue they don’t actually earn.
Salve said: “Players compete against each other. The platform simply hosts the game. How can that be equated with gambling?”
The court will hear further arguments from both sides before ruling on the case.
