New tax regime on online money games kicks in

The new Goods and Services Tax (GST) regime of 28% tax on online money games, casinos and horse racing has kicked in from Sunday with the Central government issuing orders on the norms to be followed covering the portion of taxes to be collected by the Centre and the Union Territories.

Some of the states are still in the process of notifying the legislative changes for the part of taxes to be collected by them. 

The new regime kicks in amid intense litigation around the regime that existed till today with the Supreme Court last month issuing a stay order on a Karnataka High Court decision, favouring an online gaming company.

The finance ministry orders seek to implement the GST Council 's decision to ensure that 'the chance to win' or in legal parlance, 'actionable claims' supplied by online gaming platforms, horse racing clubs and casinos should be subject to 28% GST.

Gaming companies have been resisting the new tax regime saying it will make the industry unviable.

The notifications issued by the Centre cover aspects like date of implementation, the value of the taxable service, GST return form and import of gaming as a service.

The new regime makes a clear distinction between casual online games and those involving a wager. Only the actionable claims offered by 'online money games' are subject to 28% tax on the full value of the deposits made to the platform.

Online money games are those in which the player deposits an amount in the expectation of winning some amount in a game or event.

The amendments do not affect the tax on casual online gaming in which no real money or betting or wager is involved.

Experts advised that gaming platforms have to ensure their readiness in embracing the revised taxation regime. While most provisions for the revised taxability have been notified, ambiguity on certain matters continue including classification of the supplies made, time of supply and transition provisions, said Abhishek Jain, Indirect Tax Head and Tax Partner at KPMG.

Gaming firms offering online money gaming from a place outside India to a person in India is required to be registered compulsorily from 1 October, explained Saurabh Agarwal, Tax Partner at EY.