Finance Ministry notifies valuation methodology for calculating GST on online gaming, casino

The government on September 6 notified amendments to GST law in relation to the valuation methodology to be adopted by online gaming companies and casinos for calculating tax.

The government on September 6 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 value of supply in case of online gaming and casinos as per the decision of the GST Council last month.

Also read: ‘Government intervention will give regulation of online gaming a lot more teeth’

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," Mr. 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 company/casinos, without any relief to the taxpayer in case of refund/return of money.

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

"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," Mr. Mohan added.