The Finance Ministry of India has issued notifications outlining new regulations for the registration of global online gaming platforms offering services in India, aiming to create a level playing field. Additionally, a notification has been issued setting October 1 as the effective date for implementing a uniform 28% tax on online money gaming, casinos, and horse racing.
These notifications come into effect despite some states having yet to amend their State Goods & Services Tax (SGST) laws to align with these changes.
According to one of the notifications, “a non-resident taxable person, a person required to deduct tax at source, a person required to collect tax at source, and a person supplying online information and database access or retrieval services (OIDAR) from a place outside India to a non-taxable online recipient or a person supplying online money gaming from a place outside India to a person in India” will be obligated to apply for registration and declare their PAN (Permanent Account Number).
Another notification treats the “supply of online money gaming as goods on import” and authorizes tax officials to levy Integrated Goods and Services Tax (IGST). The registration form for overseas players has also been outlined.
The GST (Goods and Services Tax) Council had previously recommended a uniform 28% tax rate on online money gaming, casinos, and horse racing during its meeting on July 11. The tax was specified to be applicable to the face value of chips purchased in the case of casinos, the full value of bets placed with bookmakers/totalisators in the case of horse racing, and the full value of bets placed in the case of online gaming.
Subsequently, on August 2, the Council recommended amendments to the Central Goods and Services Tax (CGST) and Integrated Goods and Services Tax (IGST) Acts to clarify the taxation of supplies in casinos, horse racing, and online gaming. It also proposed inserting a specific provision in the IGST Act to outline the liability for paying GST on a supplier located outside India that supplies online money gaming to a person in India. Recommendations were also made to prescribe GST on the valuation of online gaming supply and actionable claims in casinos at the entry level.
The Centre has already made these legal amendments and has now officially notified October 1 as the date for implementation. The notification has also placed online money games, casinos, horse racing, betting, gambling, and lottery in the list of specified actionable claims with effect from October 1.
Additionally, the notification has established norms for valuation. According to it, the value of the supply of online gaming, including the supply of actionable claims involved in online money gaming, “shall be the total amount paid or payable to or deposited with the supplier by way of money or money’s worth, including virtual digital assets, by or on behalf of the player.” In cases where a player does not utilize the entire deposited money and receives a balance back, that portion will not be deducted from the value of the taxable supply.
For casinos, the valuation of the supply of actionable claims will include the total amount paid for the purchase of tokens, chips, coins, or tickets, or for participating in any event, including games, schemes, competitions, or any other activity or process in the casino. In this context, the amount returned for unutilized chips or casino tokens will not be deducted from the taxable value.