This Tax Alert summarizes the recent Notification[1] issued by Central Board of Indirect Taxes and Customs (CBIC), amending Central Goods and Services Tax Rules, 2017 (CGST Rules).
Earlier, Parliament had passed bills to amend the Central Goods and Services
Tax Act, 2017 (CGST Act) and the Integrated Goods and Services Tax Act, 2017
(IGST Act) for taxability of supplies made in casinos, horse racing and online
gaming[2].
Vide present Notification, Rule 31B and 31C are being inserted in the CGST
Rules to provide for value of supply in case of online gaming and casinos as
follows:
- Value
of supplies made in online gaming (including supply of actionable claims
in online money gaming) shall be the total amount paid, payable or
deposited with the supplier in money or money’s worth, including virtual
digital assets, by or on behalf of the player.
- Value
of supply of actionable claims in casinos shall be the total amount paid
or payable for (i) purchase of tokens, chips, coins or tickets for use in
casino, or (ii) participating in any event.
- Any
amount returned or refunded by the supplier to the player for any reason,
including player not using the amount paid or deposited with the supplier
for participating in any event, or towards return of tokens, chips, coins
or tickets in case of casino, shall not be deductible from the value of
supplies made in online money gaming or casino.
An Explanation is also being
inserted to clarify that for the purpose of Rule 31B and 31C, any amount
received by the player on winning any event, which is not withdrawn and is used
for playing in a further event, shall not be considered as amount paid or
deposited with the supplier.
These Rules shall come into force on a date as may be notified by the Central
Government.
Comments:
- As
discussed in the 51st GST Council Meeting, the Rules are likely
to be made effective from 1 October 2023 along with the relevant
provisions of the CGST Act.
- Levy
of GST even in case where the player does not participate in the game or
event after depositing the money, may negatively impact the industry.
- Industry
may need to evaluate the legality of the Rules w.r.t. reduction in taxable
value through issuance of credit note where the player withdraws the money
by returning the chips etc.
- Government
may prescribe separate provisions regarding time of supply of actionable
claims involved in online money gaming and casinos.
[1] Notification No. 45/2023 – Central Tax dated 6 September 2023
[2] Refer our alert “Parliament passes bills
amending GST law for taxability of supplies in casinos, horse racing and online
gaming” dated 14 August 2023
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