By Apalka Bareja and Isha Sharma
Pursuant to the recommendation of the 50th GST Council Meeting held on July 11, 2023 concerning the imposition of consistent 28% GST rate on all actionable claims supplied in casinos, horse racing and online gaming on full face value, irrespective of whether the activities are a game of skill or game of chance, the 51st GST Council Meeting was conducted on August 02, 2023 to propose modifications in the CGST Act and IGST Act, 2017 respectively, to clarify government’s instance on taxation of online gaming sectors.
The Council also recommended to propose a specific provision in the IGST Act, 2017 to provide for liability to pay GST on the supply of online money gaming by a supplier located outside India to a person in India, for single registration in India for the said supplier through a simplified registration scheme.
It was also held that the valuation of the supply of online gaming and actionable claims in casinos is to be done based on the amount paid/payable to/deposited with the supplier by or on behalf of the player and not on the total value of each bet placed.
It was also decided by the Council that efforts will be made to complete the legislative process of making amendments in the Act within a period of two months.
Amendments in the IGST and CGST Act, 2017
On August 11, 2023, the Central Goods and Service Tax Act (Amendment) Bill, 2023 and Integrated Goods and Service Tax (Amendment) Bill, 2023 proposing modifications to the IGST and CGST Acts, 2017 respectively were introduced in the House of Parliament and the same has been passed by the Lok Sabha permitting the incorporation of 28% good and service tax on activities like horse racing, online gaming and casinos.
Salient Features of the Central Goods and Service Tax (Amendment) Bill, 2023
- Including the definition of “Online gaming”, “Online money gaming”, “Specified actionable claim” and “Virtual digital asset” have been suggested in Section 2 of the CGST Act
- Proposal to expand the scope of “Supplier” under Section 2 of the Act in order to identify the suppliers in case of supply of “Specified actionable claim”.
- Insertion of a new clause in Section 24 of the Act to provide for mandatory registration of the person for supplying online money gaming from a place outside India to a person in India.
Salient Features of the Integrated Goods and Service Tax (Amendment) Bill, 2023
- Exclusion of online money gaming from OIDAR services: The proposed amendment to the definition of Online Information and Data Access or Retrieval (“OIDAR”) services aiming to exclude online money gaming from falling within the scope of OIDAR services.
- Modification in taxation: By virtue of the proposed amendment to Section 5(1) of the Act, the government may potentially designate goods for which the IGST will be levied upon import, instead of custom duties under the Customs Act.
- Insertion of a new sub-clause: A new clause has been proposed to be inserted in Section 10(1) to establish the location of supply when goods are provided to unregistered person.
- Insertion of a new provision for supply of online money gaming services outside India: A new section 14A has been proposed to be inserted to provide for special provision for online money gaming supplied by a person located outside the taxable territory to a person located in India, including requirement of taking a single registration.
The aforementioned suggestions/recommendations shall become effective upon receiving approval from the President by assenting to the Bill.