GST Council may face pressure to waive retrospective tax demands for online gaming and casino firms on 12 September in New Delhi

The online gaming and casino industry has asked the Finance Ministry, the central government, and GST Council members to consider waiving retrospective tax demands at the 57th GST Council meeting in New Delhi on 12 September 2026. For high-risk payments, the immediate issue is not the legal theory but the cash-flow hit: if the demands are confirmed, they could run into tens of thousands of crores.

1. On 27 May 2026, the Supreme Court, in Directorate General of Goods and Services Tax Intelligence (HQS) v. Gameskraft Technologies Private Limited, held that online money gaming and casino companies must pay tax retrospectively under Rules 31B and 31C of the CGST Rules, respectively, on the initial deposits or sale of chips.
2. The court gave the industry some relief by ruling that tax applies to the initial deposits or chip sales rather than to every bet. But the industry says the resulting tax demands could still amount to tens of thousands of crores, which is many times the turnover of these companies.
3. The petition argues that the GST Council, under Section 11A of the CGST Act, has the power to waive short payment of tax if the short payment resulted from a general practice followed by the trade or industry. The point is straightforward: the entire industry says it followed a model of paying tax on platform fee or Gross Gaming Revenue (GGR), not on each bet.
4. The timing matters. Real money gaming companies have already shut down their platforms after Parliament passed the Promotion and Regulation of Online Gaming Act (PROGA) in August 2025, and they have carried out mass layoffs. In practice, that means recovery of any confirmed tax demand may be closer to an academic exercise than a live balance-sheet problem.
5. For PSPs, acquirers, and bank partners, this is the sort of dispute that can redraw a vertical. If the government and GST Council choose to waive the retrospective demands, the industry gets breathing room; if not, litigation could continue for years on an interpretational issue the companies have already spent almost a decade fighting.