Govt notifies amendments in valuation methodology for calculating GST on online gaming, casino

The government on Friday notified amendments to GST law in relation to the valuation methodology to be adopted by online gaming companies and casinos for calculating tax.

The Ministry of Finance notified amendments to Central GST law for calculating the value of supply in the case of online gaming and casinos as per the decision of the GST Council last month.

Notification clarified that winnings by any player would remain tax-neutral, as the entire tax is collected at the first stage only.

EY Tax Partner Saurabh Agarwal said this shall effectively settle the ambiguity and uncertainty around this issue. "However, the aspect of whether mere deposit of money in a wallet qualifies as a supply is unclear, and may possibly be challenged by industry," Agarwal added.

AMRG & Associates Senior Partner Rajat Mohan said under the valuation rules, the full tax rate would be applicable on the total amount paid to online gaming companies/ casinos, without any relief to the taxpayer in case of refund/return of money.

"Until now, the government has not indicated any transitional provisions for the current cash buy-ins in the player pools. We can expect the government to clarify this position through a circular in the coming few months," Mohan added.

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