GST on Online Gaming & Casinos: Decoding Rule 31B & 28% Tax

The Indian online gaming industry has undergone a seismic shift in its tax landscape. For years, platforms argued that they were "games of skill" (taxed at 18% on the platform fee) rather than "games of chance" (taxed at 28% on the full bet amount).

However, the GST Council has settled the debate with a high-stakes amendment. In 2026, the law no longer distinguishes between skill and chance for the purpose of the tax rate. All actionable claims in online money gaming, casinos, and horse racing are now taxed at a flat 28% on the full face value of the bets placed.

This guide explains the technical valuation rules under Rule 31B, the "No Double Taxation" relief, and the mandatory registration mandates for global gaming giants.

The 28% Mandate: Skill vs. Chance

The 2023 amendment to the CGST Act clarified that "Online Money Gaming" is a taxable supply.

• The Rate: 28% GST.
• The Value: The total amount paid or payable to the platform by the player.

Previously, if a player entered a contest for ₹100, and the platform took ₹10 as a "Rake Fee," GST was only paid on ₹10. Now, GST is calculated on the entire ₹100.

Valuation Rules: Decoding Rule 31B & 31C

To bring consistency to the 28% tax, two new rules were inserted into the CGST Rules:

Rule 31B: Online Money Gaming

The value of supply is the total amount paid in money or money's worth (including virtual digital assets) by the player to the platform.

• Key Relief: Any amount returned to the player from the winning pool which they use to play the next game is not taxed again. Only the "Fresh Deposit" from the player's bank account or wallet is taxed.

Rule 31C: Casinos

The value is the total amount paid by the player for purchasing chips, coins, or tokens at the casino. Similar to gaming, if a player wins and uses those winnings to buy fresh chips in the same session, no additional GST is levied.

Legal Reference

Relevant Law: Section 2(80A) of the CGST Act defines "Online Money Gaming." Rule 31B and 31C of the CGST Rules, 2017 govern the valuation of these supplies.

Registration for Global Gaming Platforms

The government has zero tolerance for tax evasion by offshore gaming websites.

• Mandatory Registration: Every foreign gaming platform with users in India must register for GST under a simplified scheme (similar to OIDAR services).
• The Blockade: If a foreign platform fails to register and pay the 28% tax, the government has the power to block access to their website or app in India under the IT Act.

Impact on Players and Payouts

For a casual player, the 28% tax significantly reduces the "Playable Amount."

• If you deposit ₹1,000 to a gaming app, the platform must first deduct ₹218.75 as GST (since ₹1,000 is inclusive of 28% tax).
• Your actual playing balance will be approximately ₹781.
• This creates a high barrier for "winning back" the tax amount, which has led to a major consolidation in the Indian gaming market.

Common Mistakes with Gaming GST

1. Confusing TDS and GST: Many players think the tax deducted from their winnings is GST. It is not. The 30% tax on net winnings is Income Tax TDS. The 28% tax on the deposit is GST. These are two separate taxes.
2. Double Taxation on Re-buys: Platforms often struggle to track "Winnings Balance" vs. "Deposit Balance." If the software accidentally charges 28% GST when a player re-enters a game using their winnings, it violates Rule 31B.
3. Ignoring VDA Deposits: Some platforms allow players to deposit using Crypto or NFTs. For GST purposes, these are treated as "Money's worth" and must be valued at the market rate to calculate the 28% tax.

Conclusion

The 28% GST regime on online gaming is one of the most aggressive tax policies in the Indian digital economy. While it has impacted the valuation of gaming startups, it has provided the government with a massive new revenue stream. For gaming companies in 2026, the focus has shifted from "Growth at all costs" to "Efficiency in Tax Reconciliation." Ensuring that your platform's backend is perfectly aligned with the Rule 31B "Fresh Deposit" logic is the only way to protect player margins and avoid departmental audits.