<p>The <span class="key-term" data-definition="Supreme Court of India — apex judicial body that interprets the Constitution; its judgments shape law and policy (GS2: Polity)">Supreme Court</span> on <strong>27 May 2026</strong> upheld the constitutional validity of a <strong>28% Goods and Services Tax (GST)</strong> levy on online gaming companies, applying it retrospectively. The decision revives tax demands of nearly <strong>Rs 2.5 lakh crore</strong> and adds pressure on a sector already facing a ban under the <span class="key-term" data-definition="Promotion and Regulation of Online Gaming Act, 2025 — legislation that bans online real‑money games and creates a regulatory framework for gaming; relevant for GS3: Economy and GS2: Polity)">Promotion and Regulation of Online Gaming Act, 2025</span>.
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<h3>Key Developments</h3>
<ul>
<li>A two‑judge bench (Justices <strong>JB Pardiwala</strong> and <strong>R Mahadevan</strong>) dismissed petitions from gaming firms challenging the GST regime.</li>
<li>The industry argued that the 28% GST should apply only prospectively from <strong>1 Oct 2023</strong>, when the <span class="key-term" data-definition="GST Council — inter‑ministerial body that decides rates and exemptions under GST; its decisions affect fiscal policy (GS3: Economy)">GST Council</span> amendments took effect.</li>
<li>The Court treated the 2023 amendments as "clarificatory" and allowed retrospective application for periods before October 2023.</li>
<li>The ruling reinforces the government's stance on <span class="key-term" data-definition="Retrospective taxation — a tax law that imposes liability on transactions that occurred before the law was enacted; often examined in GS3: Economy)">retrospective taxation</span>, enabling the state to recover taxes from earlier periods.</li>
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<h3>Important Facts</h3>
<ul>
<li><strong>GST rate:</strong> 28% on online gaming services, the highest slab under GST.</li>
<li><strong>Tax demand:</strong> Approximately <strong>Rs 2.5 lakh crore</strong> from gaming operators, fantasy‑sports platforms and casinos.</li>
<li><strong>Legal backdrop:</strong> The <span class="key-term" data-definition="Promotion and Regulation of Online Gaming Act, 2025 — legislation that bans online real‑money games and creates a regulatory framework for gaming; relevant for GS3: Economy and GS2: Polity)">Online Gaming Act</span> prohibits online money games, imposes jail terms up to three years (first offence) and fines up to Rs 1 crore.</li>
<li><strong>Regulatory body:</strong> The <span class="key-term" data-definition="Online Gaming Authority of India (OGAI) — a unified regulator under the Ministry of Electronics and Information Technology that classifies games, oversees compliance and imposes penalties (GS2: Polity, GS3: Economy)">Online Gaming Authority of India (OGAI)</span> will classify games into three categories: Online Money Game (banned), Online Social Game (allowed with data‑localisation rules), and Espor
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