The recently held 51st meeting of the GST Council has made significant recommendations on simplifying the taxation of supplies within the domains of casinos, horse racing and online gaming, for enhanced clarity and effectiveness of the taxation framework.
Amendments to Simplify GST for Casinos, Horse Racing and Online Gaming
One of the core recommendations from the Council involves introducing amendments to the CGST/IGST Acts, 2017, including amendment in Schedule III of CGST Act, 2017, with primary objective to offer clearer guidelines regarding the taxation of supplies in areas such as casinos, horse racing and online gaming. This step is crucial to ensure that the tax framework accurately captures the nuances of these activities.
Taxation of Online Money Gaming
The Council has taken a significant stride by proposing a specific provision within the IGST Act of 2017. This provision would entail the liability to pay GST on the supply of online money gaming services by overseas suppliers to individuals in India. To streamline the process, a simplified registration scheme is recommended for these foreign suppliers. Additionally, there’s a proposal to block public access to any information related to online money gaming if the supplier fails to comply with the registration and tax payment requirements.
Streamlined Valuation Approach
The Council also addresses the valuation methods for online gaming and actionable claims in casinos. Rather than considering the total value of each bet placed, the proposed approach involves valuing these supplies based on the amount paid or payable to the supplier. This excludes any funds from previous winnings. These proposed changes are expected to provide a fair and accurate basis for determining the taxable value.
Unified Tax Rate for Actionable Claims
The matter of taxation rates for actionable claims in casinos, horse racing and online gaming has been a topic of discussion. The Council has recommended a consistent tax rate of 28% on the full face value of these claims at entry level. This rate applies irrespective of whether the activity is categorized as a game of skill or chance. The intention is to establish clarity in the tax treatment of these activities and ensure equitable taxation.
Implementation Timeline
Recognizing the importance of these amendments, the GST Council has proactively committed to expediting the process. Their aim is to finalize and implement the necessary changes by October 1, 2023, for creating a robust and transparent taxation framework for these sectors.
Conclusion
The 51st GST Council Meeting has marked a pivotal moment in refining the taxation landscape for casinos, horse racing and online gaming. The proposed amendments and recommendations are designed to foster clarity, fairness and effectiveness in the tax framework for these supplies, to ensure a balanced and well-defined system that benefits both taxpayers and the overall economy.
MoF, GOI Press Release dated 02/08/2023: Highlights of Recommendations of 51st GST Council Meeting
GST Council has recommended that the valuation of supply of online gaming and actionable claims in casinos may be done based on the amount paid or payable to or deposited with the supplier by or on behalf of the player, excluding the amount entered into games/bets out of winnings of previous games/bets and not on the total value of each bet placed. This means that the 28% GST on online gaming, casinos and horse racing will be levied on the initial amount paid on the game and not on the total value of each bet placed. GST will not be applicable on the winnings which could be used to place further bets. The valuation mechanism for casino and online gaming are kept at par, i.e., GST will be charged only on the value of coins purchased and money deposited in the wallet, respectively, rather than levying GST on each game played.