The Central Government vide notification no. 30 of 2023 and 31 of 2023 have notified the amendments in online gaming in the Central Goods and Services Taxes Act (CGST Act), 2017 and Integrated Goods and Services Act (IGST Act), 2017 respectively on 18th August 2023.
The bill was introduced by the Union Finance Minister in the monsoon session of the Lok Sabha on August 11th, 2023. Both bills were approved in the Sabha without undergoing any discussions. The 50th and 51st meetings of the GST Council have played a noteworthy role in the modification of the legislation concerning online gaming.
Both amendments came into force on 18th August 2023 as of the gazette publication date. However, it is Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
The amendments made under this Act shall be without prejudice to provisions of any other law for the time being in force, providing for prohibiting, restricting or regulating betting, casino, gambling, horse racing, lottery or online gaming.
CGST Act amendments
A new addition has been made to the CGST Act in Section 2, introducing clauses 80A and 80B. The Clause 80A defines the meaning of ‘Online Gaming’. As per the insertion, “online gaming” means offering of a game on the internet or an electronic network and includes online money gaming.
According to Clause 80B, “online money gaming” means online gaming in which players pay or deposit money or money’s worth, including virtual digital assets, in the expectation of winning money or money’s worth, including virtual digital assets, in any event including game, scheme, competition or any other activity or process, whether or not its outcome or performance is based on skill, chance or both and whether the same is permissible or otherwise under any other law for the time being in force.
The government also mentioned the list of specified actionable claims through new clause 102A under Section 2. “specified actionable claim” means the actionable claim involved in or by way of— (i) betting; (ii) casinos; (iii) gambling; (iv) horse racing; (v) lottery; or (vi) online money gaming.
In relation to the definition of Virtual Digital Asset, the revision specifies that it will retain the identical interpretation as outlined in the Income Tax Act of 1961.
Also, in the principal act, in Schedule III, in paragraph 6, for the words “lottery, betting and gambling” the words “specified actionable claims” shall be substituted.
IGST Amendments
In section 5 of the principal Act, in sub-section (1), in the proviso, after the words “integrated tax on goods”, the words “other than the goods as may be notified by the Government on the recommendations of the Council” is inserted.
Further, in section 10 of the principal Act, in sub-section (1), after clause (c), the following clause is inserted, namely:—
“(ca) where the supply of goods is made to a person other than a registered person, the place of supply shall, notwithstanding anything contrary contained in clause (a) or clause (c), be the location as per the address of the said person recorded in the invoice issued in respect of the said supply and the location of the supplier where the address of the said person is not recorded in the invoice.
Explanation.—For the purposes of this clause, recording of the name of the State of the said person in the invoice shall be deemed to be the recording of the address of the said person;”.
After section 14 of the principal Act, the following section is also inserted, namely:—
“14A. (1) A supplier of online money gaming as defined in clause (80B) of section 2 of the Central Goods and Services Tax Act, 2017, not located in the taxable territory, shall in respect of the supply of online money gaming by him to a person in the taxable territory, be liable to pay integrated tax on such supply.
(2) For the purposes of complying with provisions of sub-section (1), the supplier of online money gaming shall obtain a single registration under the Simplified Registration Scheme referred to in sub-section (2) of section 14 of this Act:
Provided that any person located in the taxable territory representing such supplier for any purpose in the taxable territory shall get registered and pay the integrated tax on behalf of the supplier:
Provided further that if such supplier does not have a physical presence or does not have a representative for any purpose in the taxable territory, he shall appoint a person in the taxable territory for the purpose of paying integrated tax and such person shall be liable for payment of such tax.
(3) In case of failure to comply with provisions of sub-section (1) or sub-section (2) by the supplier of the online money gaming or a person appointed by such supplier or both, notwithstanding anything contained in section 69A of the Information Technology Act, 2000, any information generated, transmitted, received or hosted in any computer resource used for supply of online money gaming by such supplier shall be liable to be blocked for access by the public in such manner as specified in the said Act.”
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