E-gaming companies face threat as notices from GST authorities reaches deadline

The real money gaming industry or the e-gaming will soon face the tax authorities. Previously, several of the e-gaming companies were handed a show-cause notice by the goods and services tax (GST) authorities, the deadline for which is February 5, 2025. However, there seems to be a risk between the tax authorities and companies.

As per the show-cause notice, companies were asked to pay 28% GST on games like Poker, Rummy, and Fantasy Sports. This was a massive matter when the show-cause notices first started showing up, with companies claiming this much tax will likely run most e-gaming firms into the ground.

The authorities argue that games like Poker and Rummy are a game of chance and not luck, as such, they will be treated under the higher tax rate similar to gambling. At the moment, the companies are waiting on the Supreme Court’s deliberation on the matter. However, as told by Economic Times, the chances of a final verdict from the Supreme Court before February 5 are slim.

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Fate of e-gaming companies hanging on SC verdict

The main argument is between a game of skill and a game of chance. Games like Fantasy Sports, Poker and others are currently in a grey area. A decision that these games are chance-based will likely spell doom for the e-gaming companies while labelling them as skill-based games will further ensure their growth along with other gaming firms.

There is also a case where the verdict recognizes these games as a game of skill but upholds the tax rate. In this case, things will change significantly with the tax burden shifting onto players. While this may not result in a complete doom for e-gaming companies, they will likely see a slowdown in growth.