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Parliament on Friday approved two bills to amend the CGST (Central Goods & Services Tax) and IGST (Integrated Gods & Services Tax) Acts to implement the GST Council’s recommendation for 28 per cent GST on online gaming, casinos and horse-racing.
Besides implementing 28 per cent uniform Goods & Services Tax (GST) on online gaming, casinos and horse-racing, Government sources said the new law will simultaneously help in curbing a range of illegal activities associated with online gaming. However, the new mechanism will not affect start-ups engaged in casual online gaming.
The approved bills will now be sent to the President and following her assent, will become laws. Once similar amendments are made in SGST (State Goods & Services Tax) laws by 28 States and 2 Union Territories (with legislature), the recommendations are intended to be implemented with effect from October 1.
“This decision will aid in combating money laundering, illegal income, black money and other illegal activities associated with online gaming. It will also help identify and penalise those who evade taxes or indulge in fraudulent practices,” a government source said.
Online gaming and online money gaming
The amendments make a clear distinction between online gaming and online money gaming, specifying that in online money gaming the player pays or deposits an amount in the expectation of winning some amount in a game or event. The amendments do not affect tax on casual online gaming, in which no real money or betting or wager is involved.
The activity of online money gaming will be taxed on the total amount paid or payable to or deposited with the supplier, by or on behalf of the player, irrespective of whether the game is based on skill, or chance, or both. Further, “the Act is being amended to clearly provide that actionable claims involved in or by way of casinos, horse-racing and online gaming are covered under the ambit of GST,” another source explained.
The definition of “supplier” is proposed to be amended to ensure that individuals or entities operating and managing digital or electronic platforms for supplying specified actionable claims are considered suppliers of such actionable claims and are liable to pay GST on the same. Also, registration under GST is being made mandatory for a person supplying online money gaming, from a place outside India to a person in India.
The amendment in IGST Act provides for tax liability on overseas suppliers of online money gaming, and also provisions for simplified GST registration for such suppliers, as well as powers for blocking websites/ platforms of non-compliant suppliers.
“This is intended to allay the concerns of the domestic online gaming industry that these amendments in relation to online money gaming may lead to shifting of such online money gaming to platforms outside India,” second source quoted above said, while emphasising that it will provide a level playing field to domestic suppliers of online money gaming.
In case of import of intangible goods such as actionable claims involved in or by way of online money gaming, etc., which do not physically cross the customs frontier, IGST cannot be collected through Customs. The amendments propose to give powers to the Government to notify such goods, so that in case of import of such goods, IGST can be levied and collected as regular inter-State supply under provisions of the IGST Act,” he said.
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