Exclusive: Proposed GST amendments target offshore gaming firms, to tax every deposit

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Offshore gaming firms will be mandated to register under GST Law according to the proposed amendments accessed by Team G2G. The amendments are in the backdrop of the GST Council approval to impose 28% tax rate uniformly across online gaming, casinos, and horse racing.

GST Council is meeting on Wednesday to approve the proposed amendments and provide clarification on the implementation aspects of 28% tax rate.

The amendments propose to insert Rule 31B, Rule 31C in the CGST Rules to provide the approach for valuation of online gaming and casinos. According to the proposals, the tax will be imposed on the total amount deposited by the player and includes payment through virtual digital assets like bitcoin. This would also mean the tax is only on the deposit amount and not on every bet.

Amendments to CGST Act 2017 propose to insert a new section 14A to create a new provision for offshore gaming firms. Amendments to rules can be directly notified by the government while amendments to the Act require approval of the government.

The specific emphasis on the offshore gaming firms appears from the fact that offshore gaming firms were often found violating the tax laws and advertising the same as a perk to attract users.

Indian firms including industry body AIGF have represented to the government number of times to control the menace of offshore gaming firms which flout laws and compete with legal compliant gaming entities.

The amendments to the CGST Act are expected to be introduced in the ongoing Parliament session although the same is not initially listed in the agenda.

Pari materia amendments are required to be carried out the state GST enactments to implement the proposals. The government is acting on fast track to implement the proposals which were long delayed by deliberations at various levels of the government including by the Group of Ministers headed by Conrad Sangma.