New Delhi: The Supreme Court on Wednesday upheld the constitutional validity of the retrospective 28% Goods and Services Tax (GST) levy on online gaming companies, ruling that such platforms fall within the ambit of taxable suppliers under the GST framework.

A bench comprising Justices JB Pardiwala and R Mahadevan held that online gaming platforms are not mere intermediaries but suppliers of actionable claims, and therefore liable for GST on betting and gambling-related transactions.

The court observed that organised online gaming activities, including fantasy sports involving pooled stakes and uncertain outcomes, amount to actionable claims exigible to tax under the statutory regime governing betting and gambling.

It further ruled that even skill-based games acquire the character of betting and gambling for taxation purposes once users stake money on uncertain results.

Rejecting arguments from gaming companies challenging the levy, the bench said operators are not intermediaries facilitating transactions between users, but are themselves suppliers of taxable services under GST law.

The ruling upholds the 2023 amendment to the Central GST Act, which introduced a 28% tax on the full face value of bets or deposits made by users, replacing earlier models that taxed only platform commissions.

The verdict is expected to have significant financial implications for the sector, with online gaming firms facing GST-related show-cause notices amounting to over ₹1 lakh crore. Tax experts say the decision will likely pressure profit margins and force companies to rethink business models and cost structures.