New GST Rules for Overseas Online Gaming Companies in India
Overseas online gaming companies now have a particular rules under GST for compliance. Read on to know all about the new GST rules.
GST Rate on Overseas Online Gaming Companies
Particulars | Details |
| Tax Rate | 28% |
| Applicability | All online gaming platforms, including overseas platforms targeting Indian players |
| Basis for Taxation | The full value of the initial purchase of in-game currency |
| GST Registration for Overseas Platforms | Mandatory for offering services in India |
| Tax Collection Responsibility | Payment channels, tax authorities, and implementation bodies |
| Coverage | Taxable B2B and B2G supply of goods/services, export sales, and sales under the Reverse Charge Mechanism (RCM) |
| Exemptions | Not on winnings used further in the game, but tax charged will not be returned in case of a cash refund. |
| Impact on Existing Structure | Previously, games of skill had a different taxation rate (18% on platform fee), but now, both games of skill and chance are treated equally under the new rule. |
Understanding the Revised GST Rules for Online Money Gaming
The Indian government, in its continuous effort to streamline the Goods and Services Tax (GST) framework, has introduced significant amendments to the GST rules for online money gaming. The essence of the new GST rule on overseas online gaming lies in establishing a uniform taxation structure for online gaming platforms, with special attention to overseas companies targeting the Indian market.
This move, outlined in the Central Goods and Services Tax (Third Amendment) Rules, 2023, has come into effect from October 1, 2023, and brings about several noteworthy changes.
Key Amendments at a Glance
- Expanded Scope for Registration: The revised rules mandate every online gaming platform, especially those based overseas but catering to Indian users, to declare their Permanent Account Number (PAN) and State or Union territory details before seeking GST registration. This expansion explicitly includes platforms providing online money gaming services from outside India to Indian players.
- Inclusion of Online Money Gaming in Rule 14: The updated regulations integrate 'online money gaming' into the scope of Rule 14. This inclusion ensures that the provisions applicable to online recipients also extend to entities involved in providing online money gaming services.
- Redefining the Value of Supply in Online Gaming: A crucial change is in Rule 31B, where the value of the supply of online gaming, including online money gaming, is now the total amount paid, payable, or deposited by the player. This comprehensive definition includes payments made through virtual digital assets and any monetary equivalent. Notably, any amount returned or refunded to the player will not be deducted from the value of the online money gaming supply.
- Special Provisions for Casinos: Rule 31C introduces specific measures for casinos. The value of supply here is determined by the total amount paid for the purchase of tokens, chips, coins, or tickets, or for participation in any event within the casino. Similar to online gaming, refunds or returns will not reduce the value of the supply.
- Amendment in Return Filing: Rule 64 has been revised to specify the form and manner of return submission by entities involved in providing online money gaming services from abroad to Indian users. These entities must file their returns using FORM GSTR-5A by the twentieth day of the month following the calendar month or part thereof.
- Adjustment in Tax Collection Procedure: The amendment in Rule 87 adjusts the procedure for tax collection, ensuring that it encompasses services involving online money gaming.
Illustrative Example of New GST Rule on Overseas Online Gaming
Gaming Platform Type | Game Type | User Purchase (In-Game Currency) | Platform Fee (10% of purchase) | New GST (28% on Full Purchase) |
| Overseas Gaming Platform | Game of Skill | Rs. 100 | Rs. 10 | Rs. 28 |
| Overseas Gaming Platform | Game of Chance | Rs. 100 | Rs. 10 | Rs. 28 |
For both games of skill (like Online Chess) and games of chance (like Online Slot Machine) on an overseas platform, if a player spends Rs. 100, the platform's 10% fee equals Rs. 10. Out of this, the platform needs to pay 28% as GST, which amounts to Rs.28 on the Rs. 100 spent.
Also Read
GST on Online Gaming in India
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