India's 28% GST on Online Gaming: Impact, Legal Challenges & 2026 Review

Background: From 18% to 28%

Before October 1, 2023, online gaming platforms in India paid 18% Goods and Services Tax (GST) on their Gross Gaming Revenue (GGR) — the commission or platform fee charged to players. This aligned with international practice: most jurisdictions tax the operator's revenue, not the player's stake.

The 50th GST Council meeting (July 2023) changed this fundamentally. The council, chaired by Finance Minister Nirmala Sitharaman, ruled that all online gaming would be taxed at 28% on the full face value of bets — meaning the entire deposit amount, not just the platform's commission. This decision made no distinction between games of skill and games of chance.

How the 28% Tax Works

Before (18% on GGR)

After (28% on Full Value)

The difference is staggering: on a ₹1,000 deposit, the GST liability jumped from ₹27 to ₹280. For the player, this means 28% of every rupee deposited goes to tax before any game is played.

Industry Impact: By the Numbers

The impact on India's online gaming industry has been significant and measurable:

Winners and Losers

Most affected: Fantasy sports platforms (Dream11, My11Circle), real-money card game platforms, and casual betting apps. These segments saw the largest player drop-off because the tax directly reduces potential winnings.

Least affected: Esports platforms and pure skill-game operators who charge subscription fees rather than taking a cut of bets. Their tax base (subscription fee) is much smaller than the full bet value.

Unexpected beneficiaries: Offshore/unlicensed platforms that do not collect GST. Industry body AIGF estimates that unregulated platforms captured 15-20% of displaced users, undermining the tax policy's revenue goals.

Legal Challenges

Multiple gaming companies have challenged the 28% GST in Indian courts:

• Gameskraft (₹21,000 Cr case): The Karnataka High Court initially ruled in Gameskraft's favor, distinguishing skill games from gambling. However, the Supreme Court stayed this order in 2024, keeping the 28% rate in effect while the case continues.
• Dream11, MPL, and others: Filed separate petitions arguing the tax violates Article 14 (equality) by treating skill games identically to games of chance.
• Industry associations (AIGF, FIFS): Lobbying for a return to 18% on GGR, arguing the current policy destroys a legitimate, tax-paying industry while benefiting illegal offshore operators.

State-Level Complications

India's gaming regulation is further complicated by state-level laws:

The 2026 Review: What to Expect

The GST Council scheduled a comprehensive review of the online gaming tax in 2026. Key factors that will influence the outcome:

• Revenue data: If GST collections from gaming fell significantly (as industry data suggests), the government may reconsider the rate to maximize actual revenue (Laffer curve argument)
• Supreme Court ruling: The pending Gameskraft decision could legally force a distinction between skill and chance games
• International comparison: India's effective tax rate (~28% on deposits) is among the highest globally. UK taxes operators at 21% on GGR; Malta at 5% on GGR
• Black market growth: If data shows significant migration to unlicensed platforms, the policy argument shifts toward lower rates with better compliance

Implications for Players

For players, the 28% GST means:

• Every ₹100 deposited has ₹28 immediately allocated to tax
• Winnings are further subject to 30% TDS under Income Tax (separate from GST)
• The combined tax burden (GST + TDS) can exceed 50% of gross winnings
• Players should factor in tax when calculating expected returns from any gaming activity