#e4mExclusive:  GST demands slashed: Junglee Games faces ₹3,556 crore, First Games ₹704 crore

India’s indirect tax authorities have substantially reduced the GST demands originally raised against online gaming companies Junglee Games India and First Games Technology, confirming a combined tax liability of approximately ₹4,259.46 crore against demands that ran into several lakh crore rupees.

In orders (reviewed by e4m), the Central GST Commissionerate in Faridabad confirmed ₹3,555.80 crore against Junglee Games for its Haryana and Delhi registrations, against proposed demands of approximately ₹17,000 crore across the two registrations. Separately, the CGST Commissionerate in Noida confirmed a demand of ₹703.66 crore against First Games Technology, formerly known as Paytm First Games, sharply lower than the original proposed differential demand of ₹5,712.07 crore.

The reductions bring the spotlight on the gap between the tax department’s initial assessments and the liabilities ultimately confirmed during adjudication. The orders post Supreme Court judgement in the GST matter show how the examination of taxable value, player-deposit data and tax already paid can materially alter the final demand in disputes over the taxation of real-money gaming.

The confirmed amounts exclude interest. Both companies have also been subjected to penalties equivalent to the tax confirmed against them, in addition to applicable interest.

Junglee Games: Demand cut from ₹17,000 crore crore to ₹3,556 crore

Junglee Games has received the larger of the two orders, with the authority confirming a GST demand of ₹3,382.46 crore against its Haryana registration and ₹173.34 crore against its Delhi registration.

The Haryana show-cause notice had proposed a demand of approximately Rs 17,000 crore for the period from 2019-20 to September 2023-24. The separate notice for Delhi had proposed ₹7,472.74 crore for July 2017 to 2020-21.

Together, the original proposed demands amounted to approximately Rs 17,000 crore, compared with the final confirmed tax demand of ₹3,555.80 crore.

The reduction is particularly significant in the Haryana case, where the amount confirmed represents only a small fraction of the original proposal. The order, passed by Joint Commissioner Rubal Saroha, records the outcome of adjudication proceedings following the company’s submissions and personal hearings.

The dispute centred on the department’s position that GST liability could not be restricted to the platform fees retained by Junglee Games. The company maintained that it operated gaming platforms, including Junglee Rummy, Junglee Poker, Rummy.com and Howzat, and earned revenue through platform fees rather than retaining the entire amount deposited by players.

According to submissions recorded in the order, players deposited money into digital wallets and used their balances to enter games. Winners received the prize pool after deduction of the platform fee, which varied according to the game format and stakes.

The department alleged that the company was facilitating betting by allowing players to stake money on the outcomes of online card games and had incorrectly classified its supplies as services. It argued that the relevant transactions involved actionable claims associated with betting or gambling.

The adjudicating authority concluded that the company had paid GST on platform fees while the wider amounts associated with the taxable actionable claims had not been taxed in the manner required by the department.

The final demand is therefore substantially below the original notice, although the order continues to impose penalties equivalent to the confirmed tax amounts and requires payment of applicable interest.

The authority also imposed personal penalties of ₹50,000 each on directors Ankush Gera, Rahul N Bhardwaj, Kapil N Rathee and Bharat Bhatia.

First Games: Demand falls from ₹5,712 crore to ₹704 crore

First Games has also secured a substantial reduction from the demand originally proposed by the tax department.

The original show-cause notice proposed a differential GST demand of approximately ₹5,712.07 crore for the period under investigation. The adjudicating authority subsequently confirmed a differential demand of ₹690.18 crore, along with an additional ₹13.48 crore relating to discounts claimed by the company.

The combined confirmed tax liability is approximately ₹703.66 crore.

The order, passed by Additional Commissioner Parag Karunakar Singh of the CGST Commissionerate, Noida, covers financial years 2018-19 to 2022-23.

The reduction followed a reassessment of the taxable value of First Games’ online money gaming supplies using player-deposit information submitted during the proceedings.

The company told the authority that players had deposited approximately ₹4,083.56 crore, inclusive of tax, during the period under investigation. It also provided state-wise information to help determine the split between inter-state and intra-state supplies.

Based on the information, the authority calculated the taxable value at approximately ₹3,190.28 crore and the associated GST liability at about ₹893.29 crore. After adjusting approximately ₹203.11 crore already paid through GST returns, it confirmed the differential demand of ₹690.18 crore.

The revised calculation brought the demand down sharply from the original proposal of ₹5,712.07 crore.

The department had alleged that First Games classified its supplies as online content and support services, paying GST at 18%, instead of treating the relevant transactions as actionable claims associated with betting and gambling, which the department said attracted a 28% rate.

The adjudicating authority’s recalculation underscores the importance of the taxable-value assessment in determining the final liability, rather than simply confirming the amount proposed in the original notice.

Discounts add ₹13.48 crore to First Games liability

The Noida order also disallowed discounts of approximately ₹48.14 crore claimed by First Games, resulting in an additional GST demand of ₹13.48 crore.

The company had treated certain bonuses credited to players’ bonus wallets as discounts and deducted them while calculating taxable value. The department argued that the amounts were promotional expenses rather than discounts linked to specific supplies.

The authority found that the conditions required under Section 15(3) of the CGST Act for excluding the discounts from taxable value had not been met.

The additional demand comprises approximately ₹11.12 crore in integrated GST and ₹1.18 crore each in central and state GST. Together with the differential demand of ₹690.18 crore, this takes the confirmed tax liability to ₹703.66 crore.

The authority also imposed a penalty equivalent to the confirmed tax and ordered recovery of interest. A personal penalty of ₹1 lakh was imposed on chief financial officer Swati Agarwal over her role in the company’s tax classification and invoicing practices.

Adjudication changes the scale of the liabilities

The two orders illustrate the extent to which the final tax liability can differ from the amount initially proposed in show-cause notices.

For Junglee Games, the combined proposed demand of approximately ₹1.79 lakh crore was reduced to ₹3,555.80 crore. For First Games, the original differential demand of ₹5,712.07 crore was reduced to a combined confirmed tax liability of ₹703.66 crore, including the separate demand over discounts.

The distinction is important because the original notices represented the department’s proposed liabilities, whereas the adjudication orders specify the amounts ultimately confirmed by the authorities. The reductions do not, however, mean that the companies have been cleared of the underlying tax dispute: both orders confirm substantial liabilities, along with penalties and interest.

The Junglee Games proceedings followed the Supreme Court’s May 27, 2026, judgment in the Gameskraft matter, after which pending proceedings were taken up for adjudication. Junglee Games had challenged the show-cause notice before the apex court and subsequently submitted written arguments and participated in personal hearings.

Both companies have appellate remedies under Section 107 of the CGST Act. The Junglee Games order specifies a 90-day period from communication of the order for filing an appeal, while the First Games order specifies three months.

For the online gaming industry, the immediate significance lies in both the scale of the confirmed liabilities and the gap between the original proposals and the final adjudication. The outcomes also highlight the importance of transaction-level records, the treatment of player deposits and promotional incentives, and the methodology used to calculate taxable value in disputes over real-money gaming.