28% GST On Entire Money For Playing Online Games, Casinos Including Refunds; Govt Notifies New Rules

In the latest notification, the Finance Ministry has notified new rules related to the calculation of GST rates on online gaming and casinos. Irrespective of the refunds either in online gaming, or by the casino on the return of tokens, coins, chips, or tickets, GST will be deducted from the entire amount you deposit at the start. Last month, the GST Council in its 51st meeting recommended to amend the CGST Rules, 2017 to insert specific provisions for the valuation of the supply of online gaming and the supply of actionable claims in casinos accordingly.

In a notification on September 6, the Central Goods and Services Tax Rules, 2017, after rule 31A, the FinMin inserted the following rules.

Value of supply in case of online gaming including online money gaming:

According to the notification, 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.

"Provided that any amount returned or refunded by the supplier to the player for any reasons whatsoever, including player not using the amount paid or deposited with the supplier for participating in any event, shall not be deductible from the value of supply of online money gaming," it added.

Value of supply of actionable claims in case of casino:

Similarly, the notification stated that the value of supply of actionable claims in casino shall be the total amount paid or payable by or on behalf of the player for -

(i) purchase of the tokens, chips, coins or tickets, by whatever name called, for use in casino; or

(ii) participating in any event, including game, scheme, competition or any other activity or process, in the casino, in cases where the token, chips, coins or tickets, by whatever name called, are not required.

In this regard, the new rule said, "Provided that any amount returned or refunded by the casino to the player on return of token, coins, chips, or tickets, as the case may be, or otherwise, shall not be deductible from the value of the supply of actionable claims in casino."

The Finance Ministry said these rules may be called the Central Goods and Services Tax (Third Amendment) Rules, 2023. They shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

Last month, the GST council recommended that valuation of the 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.

The council in August directed the amendments in the Act at the earliest and brought the amendments into effect from 1st October 2023.

During the 50th meeting in July, the council deliberated on Casinos, Race Courses and Online Gaming and recommended that the actionable claims supplied in Casinos, Horse racing and Online gaming may be taxed at the rate of 28% on full face value, irrespective of whether the activities are a game of skill or chance.