Cabinet clears Online Gaming Bill to regulate betting and impose penalties
Govt has already blocked 1,400+ illegal apps/sites; GST and tax regime in place
Ministries issue ads disclaimers, parental advisories to curb addiction
The Union Cabinet on Tuesday approved the Online Gaming Bill, which is designed to regulate betting platforms and curb gambling through digital apps. The Bill introduces a legal framework for online gaming companies, and penalties for gambling through digital apps.
The government has been steadily tightening rules around online gaming in the past two years. Since October 2023, the sector has been subject to a 28% GST, while player winnings have been taxed at 30% starting FY25. Even offshore gaming platforms have been brought under the tax net, with enforcement agencies having the power to block unregistered or illegal sites.
The government has already blocked over 1,400 betting and gambling websites and apps between 2022 and February 2025. The Education Ministry has also issued advisories to parents and teachers to tackle the addiction.
Besides this, the Information and Broadcasting Ministry also instructed TV channels to ensure that gaming ads carry disclaimers, issuing warning about financial risks and possible addiction. “The aim is to make the internet and online gaming safe, accountable, and responsible,” the officials had said.
Inside the Tax Battle in Gaming Sector
In 2017, India introduced the Goods and Services Tax (GST), consolidating multiple indirect taxes into a unified, destination-based tax framework. In the initial framework, the online gaming sector was divided into two categories: ‘Games of Skill’ and ‘Games of Chance’.
Games of skill, such as fantasy sports and certain card games, were taxed at 18 % GST on gross gaming revenue (GGR) (stakes minus payouts). Games of chance, including casino bets and lotteries, were subject to 28 % GST on the full face value of bets.
However, games like poker and certain fantasy sports, which blend elements of skill and chance, fell in the grey areas, leading to confusion in their categorisation. As a result, the GST Council’s Law Committee noted numerous instances of tax-related litigation and inconsistent tax treatment.
To solve this issue, the GST Council in October 2023 amended the Central Goods and Services Tax Act to levy 28 % GST on the total entry fee (face value of bets) for online gaming irrespective of whether the game involves skill or chance. The amendment applies retrospectively to August 2017.
Following the amendment, the DGGI began issuing show-cause notices to several online gaming firms under Section 74 of the CGST Act, demanding GST at 28 % on the full face value of bets retrospectively.
