Supreme Court Denies Relief On GST Demands For Online Gaming Companies

The Supreme Court of India has recently made a crucial decision regarding Goods and Services Tax (GST) demands on online gaming companies. Two major players in this field, Head Digital Works and Games 24/7, were looking for immediate relief from these GST demands, but the Supreme Court didn't grant it.

What's The Core Issue? 

Well, the government decided to impose a 28% GST on the full amount of bets placed in online games. This decision is to be applied retrospectively, meaning it takes effect from the past, specifically from October 1. Earlier, these companies were paying 18% GST, but now they're facing a much higher rate.

Perspectives Of Gaming Companies

The gaming companies, represented by Senior Advocate Harish Salve, asked the Supreme Court to tell the government not to act on these tax demands until the court fully reviews this matter. 

They're feeling the pressure because the GST department is constantly asking for details and any negative decision could really stress these companies.

The GST Council, in August 2023, made it clear that all online games, whether based on skill or chance, will attract a 28% GST on the total bets placed, not just on the profits these companies make. 

Following this change, online gaming companies have been hit with huge tax bills. Some experts believe that these demands could seriously harm the whole online gaming sector in India.

Reason For High GST On Gaming Companies

The Indian government decided to impose a 28% GST on gaming companies because they view online gaming as a luxury rather than a necessity. They see these companies earning a lot from fees and commissions. 

By taxing them more, the government considers the large amount of money involved in the gaming industry. This higher tax reflects the government's approach to managing the growing digital entertainment sector.

The government, represented by Additional Solicitor General Venkatraman, requested more time as they're still preparing their response. Therefore, the Supreme Court delayed the hearing to January 8. It's a complex issue, balancing government revenue with the health of an emerging digital industry.