New Rules for Valuation of Supply in Online Gaming and Casinos
Simplified Explanation of Notification No. 45/2023–Central Tax – Insertion of Rules 31B and 31C
Heading: New Rules for Valuation of Supply in Online Gaming and Casinos
Purpose of the Notification:
Notification No. 45/2023–Central Tax introduces amendments to the Central Goods and Services Tax Rules, 2017 by inserting Rules 31B and 31C. These rules provide specific guidelines on how to determine the value of supplies related to online gaming and casinos for GST purposes.
1. Overview of Rules 31B and 31C
Rule 31B: Value of Supply in Online Gaming
- What it Covers: This rule addresses how to calculate the value of supplies for online gaming, including online money gaming.
- Key Point: The value of the supply is the total amount paid by the player to the supplier. This includes:
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- Money
- Virtual digital assets
- Any other form of payment
- Important Note: Amounts refunded or returned by the supplier are not deducted from the value of the supply. For example, if a player deposits $100 for gaming and later decides to withdraw $20, the value of the supply remains $100 for GST purposes.
Example:
A player deposits $200 into an online gaming account. If they withdraw $50 later or get a refund, the value of the supply remains $200, not $150.
Rule 31C: Value of Supply in Casinos
- What it Covers: This rule provides guidelines on how to value actionable claims in casinos.
- Key Point: The value of the supply in a casino is the total amount paid by the player for:
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- Purchase of tokens, chips, coins, or tickets, regardless of their name
- Participation in casino events or games where tokens or tickets are not necessary
- Important Note: Any amount refunded or returned by the casino is not deductible from the value of the supply. For example, if a player buys chips for $500 and later returns some chips for a refund, the GST value is still based on the initial $500 purchase.
Example:
A casino player buys chips worth $300. If they return some chips and get a refund of $50, the value of the supply for GST is still $300.
Explanation for Both Rules:
- Amount Received from Wins: For both online gaming and casino supplies, any winnings used for further participation are not included in the value of the supply. For instance, if a player wins $100 and uses it to play further without withdrawing, this $100 is not considered part of the initial value of the supply.
2. Summary
Purpose:
- These new rules aim to clearly define the value of supplies for GST calculation in online gaming and casinos, preventing ambiguity in valuation.
Impact:
- Businesses involved in online gaming and casinos will use these rules to determine GST values accurately, ensuring compliance with the tax regulations.
Effective Date:
- The rules will come into force on the date specified by the Central Government, as published in the Official Gazette.
In summary, Notification No. 45/2023–Central Tax introduces specific rules for calculating the value of supplies in online gaming and casinos, ensuring clarity and consistency in GST calculations.