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Indian Government Says GST Valid On Any Online Game With Wager Component

The Indian Supreme Court is currently deliberating a significant case involving real money gaming companies and the government’s imposition of a 28% Goods and Services Tax (GST) on such platforms. This legal battle centres on whether games like poker and rummy, traditionally considered games of skill, should be taxed at the same rate as games of chance when they involve monetary stakes.

Historically, games of skill have been treated differently under Indian law, often exempt from specific gambling regulations. However, the government’s recent stance challenges this distinction. During the proceedings, the government’s counsel argued that the presence of a financial component in these games necessitates the application of the 28% GST, regardless of their classification as games of skill. This position underscores the government’s intent to regulate and tax the burgeoning online gaming industry more stringently.

The outcome of this case holds substantial implications for the online gaming sector in India. A ruling in favour of the government’s position could lead to increased operational costs for gaming companies and potentially alter the industry’s growth trajectory. Conversely, a decision favouring the gaming companies might reinforce the skill-based distinction, influencing future regulatory approaches.

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Appearing before a Bench comprising Justices J.B. Pardiwala and R. Mahadevan, Additional Solicitor General N. Venkataraman, representing the government, stated that games of skill retain their classification only until bets or wagers are introduced.

He argued that placing bets or wagers on any game, regardless of whether it is based on chance or skill, constitutes gambling. Senior advocate A.M. Singhvi, representing one of the gaming companies, countered by emphasising that the “fundamental issue” in the case revolves around the longstanding legal “exception” granted to games of skill. Mr. Singhvi pointed out that constitutional benches comprising five and seven judges have consistently held that games of skill are inherently distinct from games of chance and should not be classified as gambling.

The real-money gaming and poker industry is currently under scrutiny in India and even in neighbouring countries, and it remains to be seen how all of this will unravel in the coming days. However, the GST component issue has hounded the industry for several years. When the problem first cropped up a couple of years ago, many real money gaming companies wrapped up their business. Even now, there are rumours that the mere hearings are creating a scenario where layoffs seem evident.

Gutshot Magazine provides all the latest news and updates about the real money gaming and poker industry. From information about poker tournaments to winners lists to interviews with some of the biggest names in the industry, we’ve got it all. We also provide you with relevant updates about any federal and corporate decisions that might have an effect on the poker and real money gaming industry. 

 

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