Following its 50th meet in New Delhi, the Goods and Service Tax (GST) Council announced that it will levy 28% GST on the full value of online gaming, horse racing, and casinos. Further, the West Bengal GST Council Representative said that the council decided to make an amendment as these are actionable claims. The GST Council further agreed that there should be no distinction between a ‘game of skill and a game of chance.’
The news has garnered a somewhat disappointed reaction from the esports community, which just celebrated National Video Games Day on July 8. It also just celebrated the fact that eSports has been officially designated as one of the medal sports in the 20th Asian Games Aichi-Nagoya 2026, as announced by the Aichi-Nagoya Asian Games Organizing Committee (AINAGOC).
Read more: Esports becomes official medal sport in Asian Games
Sagar Nair, Co-founder, and CEO of Qlan, the Gamers’ Social Network, said, “The decision of the GST council to impose a 28% tax will have a significant impact on the online gaming industry, which unfortunately includes the Esports community.
While we understand that the government needs to impose such measures on casinos, horse racing, and gambling, the higher tax rate is not justified for the competitive gaming community
Sagar Nair, Co-founder, and CEO of Qlan
“While we understand that the government needs to impose such measures on casinos, horse racing, and gambling, the higher tax rate is not justified for the competitive gaming community. It can discourage new players from entering the market as their hard-earned earnings generated through their efforts just like mainstream athletes will be taxed on the same level as those involved in gambling and other such practices.
“For the Esports industry to continue its unprecedented growth and recognition on the international stage, it is vital for the government to treat Esports as a separate category with reasonable tax rates that would support the development of the sector.”
Esports does not only have a ‘win or lose’ situation basis luck but has a very big element of skill that determines the outcome of the game. This is not what I expected, and our fight to separate esports from other labels still continues
Rohit Agarwal, Founder & Director, Alpha Zegus
Rohit Agarwal, Founder & Director, Alpha Zegus, a marketing agency specializing in the domains of gaming and lifestyle, said, “Yet again, esports being included in the same domain as online gaming, horse racing, and casino, has put our industry at a major disadvantage. While the government might have fair reasons to impose higher GST on horse racing and casino winnings, imposing the same rules on an industry like esports doesn’t seem fair. Esports does not only have a ‘win or lose’ situation basis luck but has a very big element of skill that determines the outcome of the game. This is not what I expected, and our fight to separate esports from other labels still continues.”
The GST Council has recommended that GST @ 28% would be levied on the entire face value of bets in case of casinos, racecourses, and online gaming. Further, suitable amendments would be made in Schedule III to the CGST Act to include online gaming and horse racing within the purview of taxable actionable claims. The said levy would be irrespective of whether such game is a game of skill or a game of chance.
For the online gaming industry, this recommendation would lead to a significant increase in tax incidence as compared to the position currently adopted by them, where they were paying tax only on platform fees
Kartik Solanki, Partner-Indirect Tax, BDO India
Kartik Solanki, Partner-Indirect Tax, BDO India, says, “For the online gaming industry, this recommendation would lead to a significant increase in tax incidence as compared to the position currently adopted by them, where they were paying tax only on platform fees. This will also lead to further uncertainty about the liability for the past periods, which is already a subject matter of dispute.”
The Karnataka High Court in case of Gameskraft Technologies Pvt. Ltd. has held that online games such as rummy are a game of skill and not covered under the purview of ‘betting and gambling’ and hence, the same would not be leviable to GST.
The eSports industry’s efforts to see eSports treated as a separate category due to its skill-based nature, unlike traditional gambling activities, have been in full force. The higher tax rate could discourage new players from entering the market and hinder the industry’s growth. It remains to be seen if a distinction is made between games of chance and games of skill.
