Lok Sabha passed CGST (Amendment) Bill, 2023 and IGST (Amendment) Bill, 2023
The GST Council, In its 50th meeting on July 11, 2023, had recommended the following:
a. Suitable amendments to be made to law to include online gaming and horse racing in schedule III as taxable actionable claims.
b. All three namely Casino, Horse Racing and Online gaming to be taxed at the uniform rate of 28%.
c. Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of Horse Racing and on the full value of the bets placed in case of the Online Gaming.
The GST Council In its 51st meeting on August. 2, 2023, recommended that that valuation of supply of online gaming and actionable claims in casinos may be done based on the amount paid or payable to or deposited with the supplier, by or on behalf of the player (excluding the amount entered into games/ bets out of winnings of previous games/ bets) and not on the total value of each bet placed.
The Council recommended that the law may be amended to insert specific provisions for valuation of supply of online gaming and supply of actionable claims in casino accordingly. The Council also recommended issuance of certain notifications/ amendment in notification related to the issue.
Accordingly, Finance Minister Nirmala Sitharaman introduced in the Lok Sabha on Friday, the Central Goods and Services Tax (Amendment) Bill, 2023, and the Integrated Goods and Services Tax (Amendment) Bill, 2023, to levy a 28% tax on online gaming, horse racing, and casinos with effect from Oct.1, 2023.
The Central Goods and Services Tax (Amendment) Bill, 2023 defines “online gaming”, “online money games”, “specified actionable claim” and "virtual digital asset", empower the government to block offshore suppliers who do not register, and specify that gaming operators and managing platforms would qualify as "suppliers".
The proposed Central Goods and Services Tax (Amendment) Bill, 2023 make a distinction between online gaming and online money gaming, specifying that online money gaming means online gaming in which players pay or deposit money or money’s worth, including virtual digital assets, in the expectation of winning money or money’s worth, including virtual digital assets, in any event including game, scheme, competition or any other activity or process, whether or not its outcome or performance is based on skill, chance or both and whether the same is permissible or otherwise under any other law for the time being in force.
The proposed Central Goods and Services Tax (Amendment) Bill, 2023 also specifies that a person who organises or arranges, directly or indirectly, supply of specified actionable claims, including a person who owns, operates or manages digital or electronic platform for such supply, shall be deemed to be a supplier of such actionable claims, whether such actionable claims are supplied by him or through him and whether consideration in money or money’s worth, including virtual digital assets, for supply of such actionable claims is paid or conveyed to him or through him or placed at his disposal in any manner, and all the provisions of this Act shall apply to such supplier of specified actionable claims, as if he is the supplier liable to pay the tax in relation to the supply of such actionable claims.
The proposed Central Goods and Services Tax (Amendment) Bill, 2023 also stipulate mandatory registration for a every person supplying online money gaming from a place outside India to a person in India.
The proposed Integrated Goods and Services Tax (Amendment) Bill, 2023 empowers to the department to enforce a tax liability on a supplier of online money gaming, not located in the taxable territory, in respect of the supply of online money gaming by him to a person in the taxable territory, on such supply.
Further, the proposed Integrated Goods and Services Tax (Amendment) Bill, 2023 provides that the supplier of online money gaming shall obtain a single registration under the Simplified Registration Scheme referred to in sub-section (2) of section 14 of this Act. Also that any person located in the taxable territory representing such supplier for any purpose in the taxable territory shall get registered and pay the integrated tax on behalf of the supplier. If such supplier does not have a physical presence or does not have a representative for any purpose in the taxable territory, he shall appoint a person in the taxable territory for the purpose of paying integrated tax and such person shall be liable for payment of such tax.
Above all, In case of failure to comply with provisions of tax liability or registration by the supplier of the online money gaming or a person appointed by such supplier or both, any information generated, transmitted, received or hosted in any computer resource used for supply of online money gaming by such supplier shall be liable to be blocked for access by the public in such manner as specified in the Act.
These provisions are expected to treat domestic and a supplier of online money gaming, not located in the taxable territory with parity.
The lok sabha has passed the proposed Central Goods and Services Tax (Amendment) Bill, 2023 and Integrated Goods and Services Tax (Amendment) Bill, 2023.
