The court has rightly rejected the contention of gaming companies about the need for drawing distinction between skill-based betting and chance-based betting as differentiation between the two is most blurred
The Supreme Court’s judgment upholding the Goods and Service Tax (GST) Council’s decision to collect a levy from online gaming companies on the entire amount deposited by participants, rather than on their commission is most welcome. It is the most appropriate way to discourage a social evil like betting which is pushing thousands of people into poverty.
The court has rightly rejected the contention of gaming companies about the need for drawing distinction between skill-based betting and chance-based betting as differentiation between the two is most blurred. If a participant, who has no knowledge about the game, bets on a probable outcome in a game, such a bet ceases to be skill-based and acquires the character of chance-based betting.
According to an estimate, gullible people lose Rs 20,000 crores a year on online gaming platforms, leading to mounting debt, mental trauma and suicides. The government banned online games which involve betting money — a measure came into effect on May 1. However, various companies are trying to circumvent the ban by accepting informal betting and disguised payments. The government must take tough action against them and also spread awareness among people about the adverse impact of gambling.
Apart from ruling on the component of taxation and nature of games that attract levy, the apex court has approved the GST demand for transactions recorded before 2023 when the GST Council redefined the subject of taxation to be the pooled money rather than the company’s commission. This decision is expected to impose Rs 2.5 lakh crore burden on gaming companies, virtually decimating the industry in the country.
Though the court approved the redefinition as a clarification, the move is clearly in the nature of retrospective taxation, which is good in law, bad in optics. Certainty is the most important requirement for businesses. If India wishes to attract global money, the government should resist its urge to change the rules of the game midway. If rules were not implemented by tax collectors due to lack of clarity or otherwise, the onus is on the government and its employees and not on those benefiting from their inefficiency.
