India’s Supreme Court has stayed the Goods and Services Tax (GST) case against 49 companies. Following the news, shares of Indian gaming operators have seen a rise in prices.
The Supreme Court has stayed tax evasion notices issued by Indian GST authorities amounting to Rs 1.12 billion (€13 billion).
Operators had previously approached the court for tax relief. Some have argued that government pressure to apply the 28% GST retroactively to 2018 threatens to shut down many of them.
Anuraag Saxena, chief executive of India’s E-Gaming Federation, said: “This is a win-win for gaming operators and the government. We’re optimistic about a fair and progressive resolution that will unlock the sector’s full potential – boosting investments, employment, and valuations.”
However, the court ruled that the GST notifications will not expire as originally scheduled in February. The case will be heard again in the Supreme Court on March 18.
The Indian government raised the GST on gambling from 18% to 28% in July 2023, confirming that the tax will be levied on the full value of betting turnover from August.
In October that year, the GST authorities issued show cause notices to many online gaming companies for tax evasion. The companies faced the prospect of a huge bill after the tax authorities said the rate should be applied retrospectively for a five-year period from 2018.
Many gambling companies have challenged the government’s demands in High Courts across India, resulting in the current case pending before the Supreme Court.
The case examines whether the tax should be levied on betting and whether it can be applied retrospectively.
Saumya Rathore, co-founder of one of the petitioners, Winzo, added to the Times of India: “While the GST resolution may take time, we remain optimistic that a fair resolution will not only provide the much-needed clarity but also accelerate innovation, job creation, and investor confidence.
“This clarity is crucial for many companies preparing to go public, positioning the Indian gaming ecosystem for global leadership that India deserves. With the right policies in place, India is poised to seize this once-in-a-millennium opportunity to lead the global consumer tech landscape.”
Some observers argue the GST threatens to destroy the country’s nascent skill-based gaming industry in its early stages.
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