Parliament passes bills amending GST law for taxability of supplies in casinos, horse racing and online gaming

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.