New GST on Online Gaming: Skill vs Chance-Based Classification
Online gaming in India has evolved rapidly—from casual mobile games to high-stake fantasy sports, esports tournaments, and casino apps. But with this growth comes complexity in taxation. Understanding the gst on online gaming helps developers, platform owners, and gamers navigate the legal landscape and pricing better.
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New GST Rate on Online Gaming, Gaming Zones & Consoles in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for online gaming (skill/chance), offline gaming zones/arcades, and gaming consoles (no compensation cess).
Online Gaming Under New GST: Skill vs Chance
The GST law previously distinguished “skill” vs “chance”. Under the updated regime, real-money online gaming is placed in a special slab.
| Game Type | Nature | GST Classification | New GST Rate |
|---|---|---|---|
| Games of Skill (real-money) | Based on strategy | Special slab for sin/luxury | 40% |
| Games of Chance (betting/gambling) | Based on luck | Special slab for sin/luxury | 40% |
New GST on Gaming Zone and Arcades
| Service | New GST Rate | Notes |
|---|---|---|
| Gaming zones (arcade centres) | 18% | Tickets and entry fees for offline entertainment centres |
| VR game rides, simulators | 18% | Indoor entertainment |
| Redemption/token-based games | 18% | Skill or chance distinction not relevant for offline arcades |
The gst on gaming zone remains at 18% for most offline setups.
New GST on Gaming Consoles
| Product | HSN Code | New GST Rate |
|---|---|---|
| Gaming consoles (PlayStation, Xbox, Switch) | 9504 | 18% |
| Gaming accessories (controllers, headsets) | 8471 / 8473 / 8518 | 18% |
Hardware and accessories follow the standard slab of 18%.
Online Gaming Under Old GST: Skill vs Chance
(Old GST Rates – Applicable Until 21st September)
The GST law distinguishes between two types of games:
| Game Type | Nature | GST Classification |
|---|---|---|
| Games of Skill | Based on strategy | Considered a service (18% GST) |
| Games of Chance (Betting/Gambling) | Based on luck | Considered actionable claim (28% GST on full value + Cess) |
So, the gst on gaming varies based on the game’s nature:
- Skill-based games = 18% GST
- Chance-based games = 28% GST on the full value of bets or entry fees
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GST on Online Gaming in India: Latest Rule
- 28% GST is now applicable on entry amounts, not just platform fees
- Applies to all types of online games involving money (fantasy sports, rummy, poker, betting)
- Tax is on the total deposit, not the net margin
This has reshaped the gst on online gaming in India, affecting players and platforms alike.
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GST on Gaming Industry: Impact
- Higher compliance burden
- Lower margins for real-money platforms
- Pricing pressure on gaming startups
- Classification disputes on “skill” vs “chance”
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Old GST on Gaming Zone and Arcades
| Service | GST Rate | Notes |
|---|---|---|
| Gaming zones (arcade centres) | 18% | Tickets and entry fees |
| VR game rides, simulators | 18% | Indoor entertainment |
| Redemption/token-based games | 18% | Skill or chance doesn’t affect rate |
The gst on gaming zone is 18% for most offline gaming setups.
Old GST on Gaming Consoles
| Product | HSN Code | GST Rate |
|---|---|---|
| Gaming consoles (PlayStation, Xbox) | 9504 | 18% |
| Gaming accessories (controllers, headsets) | 8471 / 8473 | 18% |
So, the gst on gaming consoles is fixed at 18% for hardware and accessories.
Input Tax Credit (ITC) in the Gaming Industry
| Expense | ITC Allowed? |
|---|---|
| Platform development software | ✅ Yes |
| Server costs and cloud hosting | ✅ Yes |
| Marketing and ad spends | ✅ Yes |
| Prize payouts to players | ❌ No |
Conclusion
With GST now being strictly enforced on all online and offline gaming services, staying compliant with the applicable gst on online gaming is critical for business owners and users alike. Whether you’re developing an app or playing on one, understanding the tax impact ensures transparency and avoids legal trouble.
As a Chartered Accountant with over 12 years of experience, I am not only skilled in my profession but also passionate about writing. I specialize in producing insightful content on topics like GST, accounts payable, and income tax, confidently delivering valuable information that engages and informs my audience.
Frequently Asked Questions (FAQs)
- What is the GST rate on online gaming in India?As per new rules, 28% GST is charged on the full entry amount for online games involving money.
- Are skill-based games also taxed at 28% now?Yes. From October 2023, all real-money games attract 28% GST, regardless of skill or chance.
- What is the GST on gaming consoles?18% GST is charged on gaming consoles and accessories.
- Is GST applicable to gaming zones and arcades?Yes. The GST on gaming zones is 18%, applied to ticket/entry pricing.
- Can online gaming platforms claim Input Tax Credit?Yes, on platform and service expenses—but not on prize payouts or distributed winnings.
