The Central Board of Indirect Taxes and Customs (CBIC) recently released Notification No. 45/2023 – Central Tax dated 6th September 2023, elucidating new rules for determining the value of supply under GST for Online Gaming and Casino Gaming. These new amendments are encapsulated under Rule 31B and Rule 31C of the CGST Rules, 2017. This article aims to dissect these rules and understand their practical implications, especially for players and operators.
Rule 31B of CGST Rules, 2017 – 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.”
Rule 31C of CGST Rules, 2017 – Value of supply in case 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.
The aforementioned Rule-31B stipulates that for online gaming transactions, the value of supply is determined by the sum paid to or deposited with the online gaming platform, whether in cash or any other quantifiable form of currency. This rule unequivocally specifies that the taxable value encompasses the total amount paid to or deposited with the provider of the online gaming service. Furthermore, any amount deposited by the player becomes a constituent of the value of supply, regardless of whether the player has utilized it in gameplay.
Rule 31C stipulates that when dealing with casino gaming, the value of supply should be determined by the sum paid for the acquisition of tokens, coins, or similar items for use in the casino, or any fees paid for entry into such events. Additionally, if any amount is refunded upon the return of tokens, coins, etc., this refunded amount should not be reduced from the value of supply.
Additionally, the notification offers clarification that if there is a gain in an online game, event, or similar scenario, any profit received and subsequently used for participating in another event without withdrawing the funds will not be deemed as a payment to the supplier. Consequently, this amount will not be regarded as the value of supply.
Let’s explore these rules in practice using the following examples:
1. On 10th September, 2023, Mr. Pratiyush, an avid enthusiast of online games, deposited Rs. 1,25,000 into his Khelo aur Jeeto wallet, along with Bitcoin worth Rs. 50,000. Subsequently, on 12th September, 2023, he placed a bet of Rs. 75,000 on the India – Pakistan cricket match and emerged victorious, winning a prize of Rs. 1,50,000. However, on 18th September, 2023, when he wagered Rs. 25,000 on the India – England cricket match, he did not receive any winnings. Finally, on 24th September, 2023, Mr. Pratiyush decided to withdraw the remaining balance from his wallet.
In this specific scenario, the value of supply for Mr. Pratiyush’s transaction will amount to Rs. 1,75,000, representing the sum he deposited with Khelo aur Jeeto.
2. Vibhore embarked on a trip to Goa with his friends, and during his visit, he ventured to the Blackout Casino. At the casino, he acquired coins valued at Rs. 50,000 to partake in a game of Roulette. In the course of his visit, he engaged in a total of four rounds of Roulette, wagering Rs. 10,000 on each round. Remarkably, he emerged victorious in three out of the four rounds. Consequently, when he concluded his time at the casino, he possessed coins with a cumulative worth of Rs. 1,20,000. Before departing the casino, Mr. Vibhore returned the coins and withdraw the corresponding monetary amount.
In this particular scenario, the supply value for Mr. Vibhore’s transaction will amount to Rs. 50,000, representing the sum he paid to acquire the coins.
Conclusion: Notification No. 45/2023 provides much-needed clarity on how the value of supply should be determined for both online and casino gaming under the GST regime. Rule 31B and Rule 31C help in establishing a straightforward method for taxation that is easy for both the players and the operators to understand and implement. While the onus falls on the operators to comply with these rules, players should also be aware of these to understand the taxation process better.
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