The Central Board of Indirect Taxes and Customs (CBIC) has introduced significant amendments through Notification No. 45/2023-Central Taxes dated September 6, 2023, pertaining to the Central Goods and Services Tax (CGST) rules. These changes are set to bring clarity to the valuation of supplies in the realm of online gaming and casinos. In this article, we delve into the specifics of Rule 31B and Rule 31C, shedding light on their implications for the industry.
Rule 31B – Valuation of Supply in Online Gaming:
Under this rule, the CBIC outlines the valuation of supply concerning online gaming, which includes online money gaming. The key provisions are as follows:
- The value of supply for online gaming, including actionable claims associated with online money gaming, is determined as the total amount paid or payable to or deposited with the supplier. This payment can be made in the form of money, money’s worth, or virtual digital assets on behalf of the player.
- It’s crucial to note that any amount returned or refunded to the player or any unused amount by the player cannot be deducted from the value of supply.
Rule 31C – Valuation of Supply of Actionable Claims in Casinos:
This rule pertains to the valuation of actionable claims in the context of casinos. It sets forth the following valuation criteria:
- The value of supply of actionable claims in a casino is determined as the total amount paid or payable by or on behalf of the player. This payment can occur when purchasing tokens, chips, coins, or tickets for use in the casino or when participating in casino events, games, competitions, or activities where tokens, chips, coins, or tickets are not required.
- Similar to Rule 31B, any amount refunded by the casino to the player upon returning tokens, chips, coins, or tickets, or through other means, cannot be subtracted from the value of supply of actionable claims in the casino.
Explanation: An important clarification provided in the notification is that any amount won by a player in an event, game, scheme, competition, or other activities, and subsequently used for further gaming or betting without withdrawal, will not be considered as an amount paid or deposited with the supplier. This exclusion is critical in determining the value of supply under Rule 31B and Rule 31C.
Conclusion: The introduction of Rule 31B and Rule 31C by CBIC brings much-needed clarity to the valuation of supplies in the domains of online gaming and casinos. These rules ensure that the total amount paid or payable to the supplier is the primary determinant of the value of supply, with strict guidelines regarding deductions for refunds or unused amounts. The explanatory note underscores the treatment of amounts won and reinvested in gaming or betting. These amendments are set to have a significant impact on the taxation and accounting practices in the online gaming and casino sectors, ensuring a more transparent and consistent approach to valuation.
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MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS)
New Delhi
Notification No. 45/2023-Central Tax | 6th September, 2023
G.S.R. 657(E).—In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely: —
1. Short title and commencement.—(1) These rules may be called the Central Goods and Services Tax (Third Amendment) Rules, 2023.
(2) They shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
2. In the Central Goods and Services Tax Rules, 2017, after rule 31A, the following rules shall be inserted, namely:-
“31B. Value of supply in case of online gaming including online money gaming.–
Notwithstanding anything contained in this chapter, the value of supply of online gaming, including 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.
31C. Value of supply of actionable claims in case of casino.– Notwithstanding anything contained in this chapter, 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:
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.
Explanation.- For the purpose of rule 31B and rule 31C, any amount received by the player by winning any event, including game, scheme, competition or any other activity or process, which is used for playing by the said player in a further event without withdrawing, shall not be considered as the amount paid to or deposited with the supplier by or on behalf of the said player.”
[F. No. CBIC-20/2/2023-GST]
RAGHAVENDRA PAL SINGH, Director
Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide notification number 3/2017-Central Tax, dated the 19th June, 2017, published, vide number G.S.R. 610(E), dated the 19th June, 2017 and were last amended, vide notification No. 38/2023 -Central Tax, dated the 4th August 2023, vide number G.S.R. 590 (E), dated the 4th August 2023.
