Recently, the Parliament passed the Central Goods and Services Tax (Amendment) Act, 2023 to tax online gaming. The Amendment came as an after-effect of the judgment of the Hon’ble Karnataka High Court in the case of Gameskraft Technologies (2019 SCC OnLine Kar 520). The key changes brought by the Amendment are as follows:
1. Defining the Terms ‘Online Gaming’ and ‘Online Money Gaming’
The Amending Act has introduced two provisions in the definition clause. Section 2(80A) of the CGST Act, 2017 defines online gaming as a game offered on the internet or electronic network and includes online money gaming.
Secondly, clause (80B) has been added to define ‘online money gaming’. The definition has been given a wide ambit to include both games of skills or chance, whether legal or not, whether the amount at stake is money or money’s worth or even virtual digital assets and irrespective of whether such event is a game, activity or competition.
2. Inclusion of Online Money Gaming, Horse Racing and Casino in Actionable Claim
Another major change is in Entry 6 of Schedule III of CGST Act, the words “lottery, betting and gambling” have been substituted with the words “specified actionable claims” to resultantly include “online gaming, horse racing and casino” within the scope of supply.
3. Change in the Definition of ‘Supplier’
A proviso has been included in the definition of supplier to create a deeming fiction and ensure that the organizer of specified actionable claim is considered as supplier of the actionable claim, thereby creating liability on the online gaming platforms to collect GST on the games played on their platform, whether directly or indirectly.
4. Mandatory Registration of Suppliers
Lastly, the amended Section 24 of the CGST Act makes registration mandatory for those online gaming suppliers where the gaming is conducted by them from a place outside India to a person in India.