The Ministry of Finance, on September 6, issued a notification detailing amendments to the goods and services tax (GST) rules about online gaming and casinos. According to these amendments, individuals visiting a casino are now required to pay GST on the full value of the chips they initially purchase.
These revisions in the GST law primarily address the methodology used by
online gaming companies and casinos to calculate taxes. Notably, the government introduced two new clauses - 31B and 31C - specifically outlining the valuation of the supply. Under these changes, claims made by players are to be included in the total amount paid or payable.
The notification further states that any refunded or returned amount should not be subtracted from the overall value of the supply. This means that if a player returns some of the chips they initially acquired and receives a cash refund, the GST will not be refunded to them.
However, winning money used in a further event without withdrawing won’t be considered a deposited amount, meaning, if one bet their winnings or a part of it in a different game again, there will be no GST on that amount.
The notification has clarified that winnings by any player would remain tax-neutral, as the entire tax is collected at the first stage only.
EY Tax Partner Saurabh Agarwal told PTI that the new rules shall effectively settle the ambiguity and uncertainty around the issue of calculation of the value of supply. "However, the aspect of whether mere deposit of money in a wallet qualifies as a supply is unclear, and may be challenged by industry," he said.
Earlier in August, Parliament approved the amendments to the Central and Integrated GST laws to levy a 28 percent tax on the full face value of bets in online gaming, casinos, and horse race clubs.
The Rajya Sabha had returned the two proposed legislations to the Lok Sabha with a voice vote without any discussion. The Lok Sabha earlier in the day approved the two money bills -- The Central Goods and Services Tax (Amendment) Bill, 2023, and The Integrated Goods and Services Tax (Amendment) Bill, 2023.
States will now get the amendments passed in the state GST laws in their respective assemblies.
