Real Money Gaming Founders Ask GST Council to Shield Personal Assets

About a dozen real money gaming founders have jointly asked India’s Goods and Services Tax Council to spare their personal assets and bank accounts from attachment and grant amnesty on legacy tax demands, after the Supreme Court upheld retrospective 28% GST on the full face value of online gaming bets. The plea adds a personal-stakes layer to a sector already hit by a 2025 ban on online money gaming and a wave of retrospective tax notices from the Directorate General of GST Intelligence. Founders argue the revived demands exceed the cumulative revenue of most companies still operating in the space.

Under the GST law, properties, bank accounts and other personal assets of directors of private limited companies can be attached if the directors cannot prove the default was not caused by gross neglect, malfeasance or breach of duty. Some of the show-cause notices already mention liabilities on directors and founders, according to executives cited in the joint appeal by RMG founders to the GST Council. The Council, chaired by the finance minister and comprising state representatives, can recommend exemptions, change rates, and waive past dues under Section 11A of the Central Goods and Services Tax (CGST) Act. Media reports say the next Council meeting could be held later this month.

What the Founders Are Asking For

The joint appeal asks the Council to invoke Section 11A and “regularise the pre-October 2023 tax position adopted by the industry,” Sudipta Bhattacharjee, partner at law firm Khaitan & Co, told The Economic Times. It also asks for waiver of penalty, interest and personal liability for founders and directors. The legal backing rests on the founders’ argument that they operated for years under a consistent reading of the GST framework, supported by decades of skill-versus-chance case law and an industry-wide practice that GST applied only on platform fees.

Khaitan & Co represented several online gaming and casino operators at the Supreme Court. Bhattacharjee said the Council should “balance revenue interests with the reality that most firms have either shut down or pivoted and lack capacity to pay.” One of India’s oldest chambers of commerce has filed a separate petition along similar lines, though it is unclear whether the matter will be on the agenda of the next Council meeting. Technology and gaming lawyer Jay Sayta, who also represented gaming companies, said the issues were purely interpretational and called on the Council to exercise its discretionary powers under Section 11A.

The Supreme Court’s May 2026 ruling has settled the taxability of online real-money gaming at 28% on the value of deposits, but left a sector-wide retrospective burden that far exceeds the cumulative revenues of most RMG and casino operators. Imposing personal liability now, when there was no intention to evade taxes, connivance, or neglect would be disproportionate and could trigger a flurry of insolvencies.

Why Directors Fear Their Personal Assets Are Now in Play

The personal-liability clause sits in a separate lane from the merits ruling. The Supreme Court closed the question of whether 28% GST applies to online gaming; the Council appeal is aimed at a different statutory hook that governs director exposure. Section 11A of the CGST Act gives the central government, on the Council’s recommendation, the power to waive past GST liabilities for any class of taxpayers. The Central Board of Indirect Taxes and Customs (CBIC) began drafting the rules that would govern its use in June 2026.

The risk is no longer hypothetical. Some of the show-cause notices sent to RMG firms “also mention liabilities on directors and founders,” an industry executive told the Supreme Court verdict upholding 28% GST on online gaming. If the government is determined to collect the dues, “they might go after their personal assets, including land, other things, which is very worrisome,” the executive said. Directors of functional casinos in Goa and Sikkim, which were not covered by the 2025 online gaming ban, are also exposed. Most RMG firms have already shut their real-money operations or pivoted to adjacent products, leaving founders with limited corporate assets between them and the taxman.

The industry’s earlier worry focused on whether the GST applied at all. The May 27, 2026 verdict closed that question, but the personal-liability provision survives the merits ruling. The Council appeal is the first structured attempt to keep that lane closed too. Some industry lawyers describe the appeal as a calibrated settlement plea, not a wholesale challenge to the retrospective levy.

• 71 show-cause notices issued to online gaming companies for alleged GST evasion of Rs 1,12,332 crore across FY 2022-23 and FY 2023-24 (up to October 2023), per Finance Ministry data tabled in Parliament.
• 28% GST on the full face value of online gaming bets, effective October 1, 2023 under CGST and IGST amendments.
• Penalty of up to 100% of the tax demand available under the GST Act for the alleged evasion.
• Section 11A of the CGST Act: discretionary waiver power the central government can use, on the GST Council’s recommendation, for any class of taxpayers.
• PROG Act, 2025: criminal penalties of up to three years’ imprisonment and Rs 1 crore for those offering online money games in India; rules effective May 1, 2026.

The Supreme Court Ruling That Set This in Motion

On May 27, 2026, a bench of Justices J B Pardiwala and R Mahadevan upheld the constitutional validity of the retrospective 28% GST on the full face value of online real-money gaming bets. The court treated the 2023 GST Council amendments as clarificatory, meaning they apply to transactions before October 1, 2023. The bench held that online gaming activities involving staking on uncertain outcomes amount to actionable claims under the GST regime, treating the skill-versus-chance distinction as no longer a shield for GST purposes.

In a parallel judgment the same day, the Supreme Court upheld state governments’ rights to legislate and ban online money gaming, validating Tamil Nadu and Karnataka laws that criminalise real-money games. The Centre had separately enacted the Promotion and Regulation of Online Gaming Act, 2025, with rules effective from May 1, 2026, prohibiting all online money games in India and creating criminal penalties for operators. Multiple industry executives told Business Standard the ruling was a major setback for the sector, especially for companies that had begun to pivot away from real-money games.

The Centre’s own submission to the court placed cumulative tax demands at around Rs 91,684.81 crore for online gaming companies and Rs 16,820.19 crore for casinos, with the amount potentially doubling once penalties and interest are added. Times of India, citing the GST Act’s 100% penalty provision, pegged the total exposure at around Rs 2.5 lakh crore before any relief formula.

The bench’s revised formula applied GST only on the initial deposit a player makes, not on winnings wagered in subsequent games, which The Economic Times estimates has reduced the sector-wide liability to Rs 50,000 crore or less from the original Rs 2 lakh crore. That relief still leaves most companies unable to pay. An industry source told Business Standard that companies will “barely be able to meet even 20 per cent of the total GST demand,” and several will have to liquidate and declare bankruptcy.

Section 11A: The One Lever Founders Want Pulled

Section 11A was inserted into the CGST Act to give the central government, on the Council’s recommendation, a general power to waive past GST liabilities, interest, penalty or fees for any class of taxpayers. Until June 2026, the provision sat unused; CBIC then began drafting rules for its use. Section 11A is not a gaming-specific relief, but the founders’ appeal argues that the gaming sector fits the criteria for a class-wide waiver.

Khaitan & Co’s Bhattacharjee argues that Section 11A should be used to “regularise the pre-October 2023 tax position adopted by the industry.” His position rests on three claims: that the pre-2023 industry treatment of GST on platform fees was consistent with prevailing case law and industry practice; that the retrospective levy exceeds the sector’s capacity to pay; and that the 2025 ban on online money gaming has already shut down most of the companies that owe the tax. Each is a legal argument the Council, not the court, would have to weigh.

The Council’s discretion under Section 11A is broad but not unlimited. The relief can be granted only on a class-of-taxpayers basis and only on the Council’s recommendation. Goa and Sikkim, where functional casinos still operate, are exposed to the personal-liability risk identified by the founders’ appeal. Their position in the Council will weigh on whether any waiver survives the vote.

• Regularise the pre-October 1, 2023 tax position (platform fee, not full face value).
• Waive penalty and interest on the residual retrospective demand.
• Waive personal liability for directors and founders.
• Provide a calibrated settlement mechanism, not blanket amnesty.
• Avoid coercive action against personal assets.

Two Parallel Tracks Founders Are Now Running

The Council appeal is one of two legal routes the founders are pursuing in parallel. The other is a batch of review petitions filed, or being filed, before the Supreme Court. At least two companies have confirmed plans to file, according to an industry official who spoke to The Economic Times. The official was blunt about the odds: the industry does not have much hope in the standard review procedure, “where same judges are formally requested to re-examine their order.”

The two routes do the same work from different angles. The Council appeal aims to shrink the absolute amount owed; the review petitions aim to revisit the underlying levy. Neither, on its own, can fully resolve the personal-liability exposure. The personal-asset risk is one reason the Council track has gained urgency even among companies that have already stopped operating.

The chamber of commerce filing adds a second voice to the Council table. CBIC’s June 2026 draft rules for Section 11A cover the general waiver mechanism but do not earmark any class of taxpayers, a structure that fits gaming’s case if the Council decides to recommend a class-wide waiver. The draft covers all classes of taxpayers without earmarking any, leaving the Council discretion over which class to recommend.

The next Council meeting, media reports say, could be held later this month. The agenda for that meeting has not been made public.

The Enforcement Problem the Council Has to Weigh

The Council’s calculus is shaped by a basic arithmetic: most companies now in the sector lack the assets to meet even a reduced demand. The Promotion and Regulation of Online Gaming Rules, 2026 has shut down the underlying activity that generated the disputed revenue, leaving corporate shells largely hollow. The gap between the demand and the capacity to pay now sits at the heart of the Council’s enforcement choice.

Sudipta Bhattacharjee, who represented gaming and casino operators at the Supreme Court, told the full impact of the SC verdict on the gaming sector that the verdict “may not practically yield to anything significant for GST authorities, with the complete ban on online money gaming now, most companies have either shut down or pivoted to some other area of business.” He added that the GST amounts demanded are “several times higher than cumulative revenues ever earned by these companies.” For the Council, that translates into a question of whether to pursue full enforcement and risk a wave of bankruptcies, or to settle for a lower recovery under Section 11A and preserve revenue stability in the surviving casino and horse-racing sub-sectors.

EY India’s Saurabh Agarwal said the retrospective impact “creates an immediate, steep financial burden that cannot be passed on to consumers,” and that survival would hinge on “rapid business model adaptation, aggressive cost-rationalisation, and absolute regulatory alignment.” For most RMG firms, the business model has already changed; the question now is whether the tax tail will follow the operational pivot. The Council’s decision on Section 11A will set the price for that pivot, both for the companies and for the individuals behind them.

Upholding the 28% GST on full face value, especially with retrospective impact, creates an immediate, steep financial burden that cannot be passed on to consumers. Survival will hinge on rapid business model adaptation, aggressive cost-rationalisation, and absolute regulatory alignment.

Frequently Asked Questions

What is Section 11A of the CGST Act?

Section 11A gives the central government, on the GST Council’s recommendation, the power to waive past GST liabilities, interest, penalty or fees for any class of taxpayers. CBIC began drafting the implementing rules in June 2026, and none of the drafts so far earmark a specific taxpayer class. The provision is not gaming-specific.

Why are RMG founders asking for personal liability protection now?

The May 27, 2026 Supreme Court verdict upheld the retrospective 28% GST levy and revived the show-cause notices already in circulation. Some of those notices mention liabilities on directors and founders, opening the door to attachment of personal assets such as bank accounts and property. The Council appeal is the founders’ attempt to use Section 11A to prevent that outcome.

How much do the retrospective GST demands total?

The Centre told the Supreme Court the cumulative demand was Rs 91,684.81 crore for online gaming companies and Rs 16,820.19 crore for casinos, before penalties and interest. Times of India pegged the post-penalty total at around Rs 2.5 lakh crore. The bench’s revised formula, which taxes only the initial deposit, has cut the sector-wide exposure to Rs 50,000 crore or less, per The Economic Times.

Which gaming companies face the largest GST notices?

Gameskraft faces a Rs 21,000 crore notice; Dream11 faces Rs 40,000 crore; Delta Corp faces multiple notices totalling Rs 23,204 crore. The original 71 show-cause notices covered alleged GST evasion of Rs 1,12,332 crore across FY 2022-23 and FY 2023-24, up to October 2023, per Finance Ministry data tabled in Parliament. The verdict overturned the Karnataka High Court relief that Gameskraft had earlier secured.

Could the GST Council actually waive the retrospective demands?

The Council can recommend a class-wide waiver under Section 11A, but the recommendation has to clear the Council’s weighted voting structure, in which state finance ministers hold votes tied to GST revenue. Several states derive significant casino and lottery revenue and may prefer full enforcement. The next Council meeting, media reports say, could be held later this month.

Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. The retrospective GST demands, Council recommendations, and personal-liability exposures described here can change as the case progresses; affected founders and directors should consult a qualified tax professional. Figures are accurate as of publication on July 1, 2026.