This Tax Alert summarizes bills passed by the Parliament for amendments in the Central Goods and Services Tax Act, 2017 (CGST Act) and the Integrated Goods and Services Tax Act, 2017 (IGST Act) regarding taxability of supplies made in casinos, horse racing and online gaming.
The key amendments are as follows:
- The terms “Online gaming”,
“Online money gaming", “Specified actionable claim” and “Virtual
digital asset” have been defined. Further, definition of “Supplier” and
“Online information and data access or retrieval services” (OIDAR) are
amended.
- Schedule III to the CGST Act is
amended to cover transactions involving specified actionable claims within
the purview of “supply”.
- Section 24 of the CGST Act is
amended to provide for mandatory registration of person supplying online
money gaming, from a place outside India to a place in India.
- Proviso to Section 5(1) of the
IGST Act has been amended to provide that in case of import of notified
goods, the levy of integrated tax (IGST) shall be as per Section 5(1) of
the IGST Act.
- New Section 14A has been
inserted in the IGST Act to provide for special provision for online money
gaming supplied by a person located outside the taxable territory to a
person located in India.
Bills have been passed by both the houses of Parliament and awaits President’s
assent.
Comments:
- As discussed in the 51st GST
Council Meeting, the above amendments may be made effective from 1 October
2023. Further, the States may have to make corresponding amendments in
their respective SGST Acts.
- The provisions for valuation of
supplies made in casinos and online gaming are likely to be incorporated
in the CGST Rules.
- While the online gaming
companies are deemed to be the supplier, one will need to evaluate whether
such transactions are being made in their course or furtherance of
business to qualify as supply.
- It is pertinent to note that
the amendments to make ISD mechanism mandatory are not incorporated in
this bill.
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