Context:
The judiciary brought attention back on the need to deregulate the online gaming sector through a 2025 Supreme Court stay order on the Union government’s retrospective GST demand on the sector.
Online Gaming in India:
- Refers to playing video games over the internet via computers, gaming consoles, or smartphones.
- Enables real-time interaction and competition between players globally.
- Classification –
- Skill-Based Games – Depend on knowledge, strategy, and skill; Legal in India.
- Games of Chance – Outcomes primarily depend on luck; Illegal in India.
- Market – India emerged as world’s largest gaming market in 2023
- Taxation –
- GST, 2023 – 28% tax on entry amounts in online gaming.
- Income Tax Act, 1961 – 30% tax (excluding surcharge and cess) on winnings above ₹10,000 from any game.
Regulation of Online Gaming in India:
- State Jurisdiction – States regulate gaming, betting, and gambling laws (Entry 34, State List as per the 7th Schedule of Constitution)
- IT Rules, 2023 – Defines online gaming, intermediaries, permissible games, and self-regulatory bodies.
- Prize Competitions Act, 1955 – Governs competitions offering prizes.
- Public Gambling Act, 1867 – Exempts skill-based games from penalties.
- Foreign Direct Investment (FDI) Restrictions – FDI is prohibited in lotteries, gambling, and betting.
- FEMA (1999) – Prohibits remittances for lottery winnings, racing, or hobbies.
- Judicial Stand –
- KR Lakshmanan Case (1996) – Supreme Court ruled that horse race betting qualifies as a game of skill.
- Geeta Rani Case (2019) – Pending decision on sports betting as a skill-based game.
Source: TH
Previous Year Question
Consider the following items:
1. Cereal grains hulled
2. Chicken eggs cooked
3. Fish processed and canned
4. Newspapers containing advertising material
Which of the above items is/are exempted under GST (Good and Services Tax)?
[UPSC Civil Services Exam – 2018 Prelims]
(a) 1 only
(b) 2 and 3 only
(c) 1, 2 and 4 only
(d) 1, 2, 3 and 4
Answer: (c)
Explanation:
Fish, crustaceans & other aquatic invertebrates in processed, cured or frozen state are taxable at 5% rate under GST.