The Government has notified GST laws to clarify regarding uniform 28 per cent tax on the face value for real money online gaming, casinos and horse racing.

The laws which have been amended include – Central Goods & Services Tax (CGST) Act and Integrated Goods & Services Tax (IGST) Act. Though the Finance Ministry had said that it intends to implement the amendment with effect from October 1, the notifications say amendments “shall come into force on such date as the Central Government may, by notification in the Official Gazette.” Also, different dates may be provided for implementing various provisions of the amended acts.

On August 11, Parliament approved two bills to amend the CGST and IGST Actsto implement the GST Council’s recommendation for 28 per cent GST on online gaming, casinos and horse racing. Besides implementing a 28 per cent uniform Goods & Services Tax (GST) on online gaming, casinos and horse racing, Earlier, Government sources said the new law will simultaneously help curb a range of illegal activities associated with online gaming. However, the new mechanism will not affect start-ups engaged in casual online gaming. Now similar amendments are to be made in SGST (State Goods & Services Tax) laws by 28 States and 2 Union Territories (with legislature),

“This decision will aid in combating money laundering, illegal income, black money and other illegal activities associated with online gaming. It will also help identify and penalise those who evade taxes or indulge in fraudulent practices,” a government source said.

The amendments make a clear distinction between online gaming and online money gaming, specifying that in online money gaming the player pays or deposits an amount in the expectation of winning some amount in a game or event. The amendments do not affect tax on casual online gaming, in which no real money or betting or wager is involved.

The activity of online money gaming will be taxed on the total amount paid or payable to or deposited with the supplier, by or on behalf of the player, irrespective of whether the game is based on skill, or chance, or both. Further, “the Act is being amended to clearly provide that actionable claims involved in or by way of casinos, horse-racing and online gaming are covered under the ambit of GST,” another source explained.

The definition of “supplier” is proposed to be amended to ensure that individuals or entities operating and managing digital or electronic platforms for supplying specified actionable claims are considered suppliers of such actionable claims and are liable to pay GST. Also, registration under GST is mandatory for a person supplying online money gaming from outside India to a person in India.

The amendment in IGST Act provides for tax liability on overseas suppliers of online money gaming, provisions for simplified GST registration for such suppliers, and powers for blocking websites/ platforms of non-compliant suppliers.

“This is intended to allay the concerns of the domestic online gaming industry that these amendments in relation to online money gaming may lead to shifting of such online money gaming to platforms outside India,” the second source quoted above said while emphasising that it will provide a level playing field to domestic suppliers of online money gaming.