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Supreme Court upholds 28 per cent GST on online gaming and retrospective tax demands, gaming stocks including Delta Corp Ltd and Nazara Tech Ltd fall up to 16 per cent
Gaming Shares Tumble After SC Validates Retrospective GST Demands On Online Gaming Firms
Gaming stocks including Delta Corp Ltd and Nazara Tech Ltd tanked up to 16 per cent on Friday, following the Supreme Court’s upholding 28 per cent GST on online gaming and validating retrospective tax demands raised by authorities on earlier transactions.
This marks a sharp blow to gaming firms amid the government’s tightening grip on them and could potentially expose the sector to an incremental GST liability running into nearly Rs 2.5 lakh crore.
The SC ruling endorses the government’s position that online gaming platforms are liable to pay GST at 28% on the full face value of bets placed by users, instead of paying tax only on gross gaming revenue (GGR) or platform fees.
A bench of the Supreme Court held that GST demands raised by tax authorities cannot be invalidated merely through challenges to the rules framed under the GST law.
The Court also rejected the argument that online gaming platforms function merely as intermediaries or facilitators between players. Instead, it held that such platforms supply “actionable claims”, making them taxable under the GST framework.
The bench observed that once money is staked on uncertain outcomes, even games involving skill take on the character of betting and gambling for GST purposes. The ruling assumes significance because several online gaming companies had challenged the retrospective applicability of the 28% GST levy on transactions before October 2023.
The gaming industry had argued that the GST framework prior to amendments introduced in September 2023 did not clearly provide for taxation at 28% on the full contest entry amount.
Delta Corp Ltd shares hit the hardest by falling 16 per cent to Rs 68.15 per share, compared to the previous day’s close at Rs 81.05 per share.
Nazara Tech shares dropped to Rs 279 per share before recovering to Rs 288.55 per share intraday.
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