Online gaming, casinos and the journey to twenty eight percent and beyond

A sector taxed on deposits rather than margin, with a retrospective demand history unlike any other.

The change in the law

The amendments inserted definitions of online gaming, online money gaming and specified actionable claim, and brought online money gaming within the tax net as a supply of actionable claims.

Rule 31B values the supply in online money gaming as the total amount paid or payable to or deposited with the supplier by or on behalf of the player, excluding amounts returned or refunded in the manner prescribed. Rule 31C provides the corresponding rule for casinos based on the purchase of tokens or chips.

The rate is twenty eight percent on that value. The earlier structure, under which many platforms paid eighteen percent on the platform fee, was replaced.

Offshore suppliers of online money gaming to persons in India were brought within a registration requirement, with consequences for non compliance.

The retrospective demand controversy

Departments issued demands for periods before the amendment, contending that games of chance were always taxable on the full stake value at twenty eight percent, and that the platform fee approach was wrong.

The Karnataka High Court quashed a very large demand on one operator, and the revenue appealed. The Supreme Court took up the batch, and the question of the pre amendment position — including whether the games were games of skill and whether the full stake value was the measure — was argued at length.

Any advice on this must be checked against the current status of that litigation, because the outcome determines exposure for an entire sector.

For operators, the practical consequence has been that the pre amendment exposure is a going concern question rather than a tax dispute.

Where the disputes now sit

The boundary between online money gaming and other online games, since the valuation and the rate differ sharply.

The treatment of bonuses, promotional credits, and amounts redeposited from winnings, which the rules address in specified terms and which platforms compute differently.

Withdrawal and refund adjustments, and whether the value once taxed is reduced.

Offshore platforms and the enforcement mechanism against them, including blocking measures.

Credit, which for a platform paying twenty eight percent on deposits is of limited use against a cost base that is largely marketing and technology.

What to do on Monday

1. Compute the value strictly under Rule 31B or 31C with documented workings for bonuses, refunds and redeposits.

2. Track the Supreme Court batch on the pre amendment period and preserve every ground in pending proceedings.

3. Classify each game against the amended definitions in writing.

4. Model the credit position, which for this sector is usually of limited value against the liability.

Questions we are asked on this

Is the tax on the deposit or on the platform fee?

For online money gaming, on the total amount deposited, as valued under Rule 31B, and not on the platform fee.

Are winnings redeposited taxed again?

The rules address amounts returned and redeposited in specified terms. Compute strictly in accordance with the rule and document the workings.

What is the position for periods before the amendment?

Contested, and before the Supreme Court in a batch of matters. Verify the current status; it determines the exposure for the sector.

Are games of skill outside the levy?

The amended definitions turn on whether the game involves money or a stake, rather than on the skill or chance distinction alone. Read the definitions.

Do offshore platforms have to register?

The amendments introduced a registration requirement for offshore suppliers of online money gaming to persons in India, with enforcement consequences.

In this cluster

• Place of supply under GST: the full decision tree
• Intermediary services: characterisation, exposure and structuring
• Export of services: the five conditions and where claims fail
• Dharmendra M. Jani: the constitutional attack on intermediary taxation, and where it stands
• Mohit Minerals: ocean freight, composite supply, and the sentence that changed GST federalism
• Import of services and reverse charge under Section 5(3) of the IGST Act
• OIDAR services: registration, compliance and the 2023 amendment
• Bill to ship to transactions and Section 10(1)(b)
• High seas sales, bonded warehouse transfers and Schedule III
• Merchant trade and out and out supplies

GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.