The CBIC vide notifications dated 19th October 2023 amended Notification No. 11/2017 dealing with a rate on goods and /or services, exemption on goods and/or services, and reverse charge mechanism to give effect to the recommendations of the 52nd GST Council Meeting held on 7th October 2023. The changes also involved consequential amendments on account of the new tax regime for online gaming, casinos, and horseracing.
The amendment under Notification No. 11/2017 dealing with CGST Act 2017 is as follows:
Similar notifications have been passed under the Integrated Goods and Services Tax Act, 2017 and the Union Territory Goods and Services Tax Act, 2017. These amendments were necessitated to clear ambiguity in light of new notifications dealing with gambling and betting.
To navigate the new tax regime, fantasy operator Dream11 and unicorn real money gaming firm Games24/7 have decided to offer discount points or promo cash to users equal to the amount of GST.
Tax authorities have considered these amendments as only clarificatory in nature and have issued notices to several money gaming and casino companies. A Supreme Court bench headed by CJI is hearing an appeal from the tax department challenging a Karnataka High Court order quashing a tax notice to the Bengaluru-based company. The matter is expected to be heard on 31 October 2023. This week, Sikkim High Court asked DGGI to not take any further action in Delta Corp’s Rs. 628 crore GST show cause notice.
As the department readies action against all real money gaming entities, the outcome of this case is crucial for the survival and direction of the industry.
It is worth noting that although the centre has notified 1st October as the effective date for the 28% tax rate for online gaming, casinos and horseracing, several states are yet to make corresponding amendments to the SGST Laws.