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GST Amendments: 28% Tax on Online Gaming Effective October 1

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The Finance Ministry on Friday notified amendments to the GST law provisions for taxing online gaming, casinos, and horse racing. These amended laws will come into effect from October 1. The notification also expands the list of specified “actionable claims” to include online money games, casinos, horse racing, betting, gambling, and lotteries. Additionally, the government has introduced new regulations for online gaming companies seeking registration in the country.

With notifications published late Friday, the Centre has implemented amendments in CGST (Central Goods & Services Tax) and IGST (Integrated Goods & Services Tax) laws that Parliament passed last month.

According to the amendments to the Central GST Act, these transactions will now be categorized as “actionable claims,” aligning them with lottery, betting, and gambling. They will be subject to a 28 per cent Goods and Services Tax (GST) based on the total face value of the bets. Simultaneously, revisions to the Integrated GST (IGST) Act now require offshore online gaming platforms to register in India and adhere to domestic tax regulations by paying taxes accordingly.

In July and August, the GST Council, comprising finance ministers from both the central and state governments, approved changes to the law. These changes included the inclusion of online gaming, casinos, and horse racing as taxable actionable claims. It was clarified that such transactions would be subject to a 28 per cent tax based on the full bet value.

The GST Council, during its August meeting, decided that the revised provisions regarding the classification of these transactions as actionable claims and the clarification of taxation rules would take effect from October 1. A review of the implementation is scheduled for April 2024, after six months.

The new notifications come even as some states still have to notify or amend changes in their state GST provisions.

How the Value of Taxation Will Be Determined:

The Finance Ministry, in another notification, stated that the “supply of online money gaming, supply of online gaming, other than online money gaming; and supply of actionable claims in casinos” will determine the value for taxation.

The value of supply of online gaming, including supply of actionable claims involved in online money gaming, “shall be the total amount paid or payable to or deposited with the supplier by way of money or money’s worth, including virtual digital assets, by or on behalf of the player,” as per the notification.

When a player doesn’t utilize their entire deposited amount and receives a refund for the remaining balance, that unused portion will not be considered for deduction from the taxable supply value.

In the case of casinos, the valuation of the actionable claim supply will encompass the total payment made for acquiring tokens, chips, coins, or tickets, as well as participation in any event, such as games, schemes, competitions, or other activities within the casino. Similarly, any amount refunded for unutilized chips or casino credits will not be subtracted from the taxable value.

Additionally, another notification classifies the supply of online money gaming as import goods, granting tax authorities the authority to impose Integrated GST (IGST). Furthermore, the registration form for overseas players has been officially announced.

The notification also said, “a non-resident taxable person, a person required to deduct tax at source, a person required to collect tax at source and a person supplying online information and database access or retrieval services (OIDAR) from a place outside India to a non-taxable online recipient or a person supplying online money gaming from a place outside India to a person in India” will be required to apply for registration and declare PAN.

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