The Goods and Services Tax (GST) Council in its meeting on August 2 is likely to discuss bringing the transactions, payments and winnings, made in virtual digital assets in online gaming under the 28 percent tax net that will be imposed on the full face value, according to a person familiar with the development.
The proposed amendment in the Central GST Act says that transactions in the form of winnings as well as deposits even in the form of virtual digital assets will come under the highest GST slab, the person told Moneycontrol.
“The value of supply of online gaming shall be the total amount paid 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,” the amendment proposes.
The upcoming meeting, which will be held via video-conferencing, comes less than a month after the previous meeting. All online gaming platforms currently pay 18 percent GST on the platform fees, also known as the Gross Gaming Revenue (GGR), and not on the full value of the transaction, also known as the Contest Entry Amount (CEA).
This is in line with the central government’s intention to bring in a clarificatory amendment to make taxation of online gaming more explicit, Revenue Secretary Sanjay Malhotra had told Moneycontrol in an interview on July 13.
“The companies or persons who own, operate or manage digital or electronic platforms for online games will be under the tax net whether the actionable claims are supplied in money or virtual digital assets. The 28 percent tax rate provision of the Act will apply for supply of such actionable claims,” according to the proposed amendment.
An actionable claim is defined as goods under the Central Goods and Services Tax Act, 2017. So far, lottery, betting and gambling were classified as actionable claims. Now, horse racing and online gaming will be added.
The Council in the August 2 meeting will also approve the special provision for online money gaming supplied by a person located outside the taxable territory.
“A supplier of online money gaming as defined in clause (80B) of section 2 of the CGST 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,” the amendment proposes.
There would be compulsory registration for every person supplying online money gaming from a place outside India to a person in India, according to the proposed amendment.
The Council is also likely to bring in legal amendments to provide further clarity on the tax treatment for casinos under the GST.
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