How GST Impacts Online Gaming and Fantasy Sports in India (2025)
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- by MI September 18, 2025
The online gaming industry in India has grown rapidly, especially in the areas of fantasy sports, esports, and real money games. However, the taxation of these platforms under the Goods and Services Tax (GST) has been a subject of debate. With GST 2.0 in 2025, new rules have come into effect that directly impact both players and operators.
GST Rates on Online Gaming and Fantasy Sports
| Category | GST Before 2025 | GST Under GST 2.0 (2025) |
|---|---|---|
| Skill-based Games (Fantasy Sports, Esports) | 18% | 28% |
| Chance-based Games (Betting, Casino, Lottery) | 28% | 28% (No change) |
| Gaming Platform Fee (Service Charges) | 18% | 28% |
Impact on Players
- Higher entry costs: Players must now pay more as platforms pass on the higher GST rate.
- Reduced winnings: Effective returns on investments in fantasy sports or gaming apps go down.
- Shift in preferences: Many casual players may move away due to increased taxation.
Impact on Gaming Companies
- Increased tax burden: Companies must charge 28% GST on deposits or entry fees.
- Compliance challenges: Frequent reporting and classification between skill-based and chance-based games.
- Impact on startups: Smaller gaming startups may find it difficult to remain profitable.
- Reduced user engagement: The higher cost may lower participation in fantasy sports contests.
Difference Between Skill-Based and Chance-Based Games
Under GST, a key distinction exists:
- Skill-based games (fantasy sports, chess, esports) – previously taxed at 18%, now 28% under GST 2.0.
- Chance-based games (casino, lottery, betting) – taxed at 28%, no change in GST 2.0.
Compliance Requirements Under GST 2.0
- All gaming companies must register under GST, irrespective of size.
- GST must be collected on deposits, entry fees, or platform charges.
- Platforms must issue GST-compliant invoices for every transaction.
- Monthly and quarterly returns need to be filed digitally to avoid penalties.
Future Outlook for Online Gaming in India
The Indian online gaming market is projected to grow despite higher taxes, driven by rising internet penetration and youth engagement. However, GST 2.0 has made it more expensive for both players and companies, potentially pushing startups to consolidate or seek alternative revenue models.
Conclusion
While GST on online gaming and fantasy sports in India aims to regulate the fast-growing industry, the higher tax rates under GST 2.0 may slow down growth and affect user participation. For businesses, compliance, transparency, and adapting business models will be key to survival in the new tax environment.
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