Central Goods and Services Tax (Amendment) Bill, 2023

August 14, 2023

The Central Goods and Services Tax (Amendment) Bill, 2023, recently introduced in Lok Sabha, proposes significant changes to the taxation framework under the Central Goods and Services Tax (CGST) Act, 2017. The bill focuses on the taxation of specified actionable claims and online money gaming. Under the current CGST Act, transactions involving actionable claims, excluding certain activities, are not considered supply and thus not taxable.

The new amendment expands the scope, imposing CGST on suppliers of specified actionable claims linked to activities like betting, casinos, horse racing, lottery, gambling, and online money gaming. The bill outlines the definition of online money gaming and who qualifies as suppliers. Additionally, the bill mandates registration for foreign entities providing online money gaming in India and proposes a 28% tax on total bet value in online gaming, casinos, and horse racing.

How does the Central Goods and Services Tax (Amendment) Bill, 2023, modify the taxation of actionable claims?

The bill expands the scope of taxable transactions by bringing specified actionable claims related to activities like betting, casinos, horse racing, lottery, gambling, and online money gaming under the ambit of CGST. Previously, actionable claims, except for certain activities, were not considered supply and thus not taxable. The amendment changes this by imposing CGST on suppliers of specified actionable claims associated with the mentioned activities.

What is the definition of online money gaming according to the bill?

Online money gaming, as defined by the bill, refers to online games where players deposit money, including virtual digital assets, with the expectation of winning money or its equivalent value. This definition encompasses games of skill, chance, or a combination of both, whether allowed or banned under any law, and includes games offered on the internet or electronic networks.

Who will be considered a supplier of specified actionable claims under the amended CGST Act?

The bill considers a person who organizes or facilitates the supply of specified actionable claims, including those who own, operate, or manage digital or electronic platforms for such supply, as their supplier. This classification applies regardless of how the consideration for the supply is conveyed or made available to the person and includes monetary values as well as virtual digital assets.

What changes does the bill propose for online money gaming providers outside India?

The bill mandates that foreign entities supplying online money gaming to individuals in India must register under the CGST Act. This provision expands the reach of taxation to include offshore entities involved in online money gaming.

What is the tax rate proposed for online gaming, casinos, and horse racing?

The bill suggests a 28% tax on the total bet value in online gaming, casinos, and horse racing. This represents a substantial change in the taxation of these activities and aims to generate revenue from the growing online gaming industry.

How does the bill address compliance for offshore online gaming platforms?

The bill includes provisions to block access to online gaming platforms located overseas if they fail to comply with registration and tax payment requirements. This measure ensures that offshore entities offering online gaming services in India adhere to the taxation and regulatory framework set by the CGST Act.

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