AMENDMENTS TO ‘CGST ACT’ AND ‘IGST ACT’

[Mr. M. GOVINDARAJAN]

Introduction

Finance Minister has introduced CGST Act (Amendment) Bill, 2023 and IGST Act (Amendment) Bill, 2023 in the Parliament on 11^th August, 2023 to implement decisions of GST Council to levy 28% tax on online gaming. Both the Bills have been passed by the Lok Sabha on same day and later by Rajya Sabha.  The President of India gave assent on 18.08.2023 and the same have been notified in the Official Gazette.

Amendments to ‘CGST Act’

The Central Government brought an amendment to the Central Goods and Services Tax Act, 2017 through the Central Goods and Services Tax (Amendment) Act, 2023 (‘Act’ for short), vide Notification No. 30, dated 18.08.2023.  The provisions of the amendment Act do not have immediate effect.  It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.  Different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

The amendments made under this Act shall be without prejudice to provisions of

any other law for the time being in force, providing for prohibiting, restricting or regulating betting, casino, gambling, horse racing, lottery or online gaming.

The amendment Act inserted some new definitions in Section 2 of the Act.  The newly inserted definitions are as below-

Section 2(80A) - Online gambling - The expression ‘online gambling’ is defined as offering of a game on the internet or an electronic network and includes online money gaming.

Section 2(80B) - Online Money gambling - The expression ‘online money gambling’ is defined as online gaming in which players pay or deposit money or money's worth, including virtual digital assets, in the expectation of winning money or money's worth, including virtual digital assets, in any event including game, scheme, competition or any other activity or process, whether or not its outcome or performance is based on skill, chance or both and whether the same is permissible or otherwise under any other law for the time being in force.

Section 2(102A) - Specified actionable claim - The expression ‘specified actionable claim’ as the actionable claim involved in or by way of-

• betting;
• casinos;
• gambling;
• horse racing;
• lottery; or
• online money gambling.

Section 2(117A) - Virtual digital Asset - The expression ‘virtual digital asset’ is defined as having the same meaning as assigned to it in clause (47A) of section 2 of the Income-tax Act, 1961.

Amendment to Section 2(105)

Section 2(105) of the Act defines the term ‘supplier’ in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied.

The amendment Act inserted a proviso to this section.  The newly inserted proviso provides that a person who organizes or arranges, directly or indirectly, supply of specified actionable claims, including a person who owns, operates or manages digital or electronic platform for such supply, shall be deemed to be a supplier of such actionable claims, whether such actionable claims are supplied by him or through him and whether consideration in money or money's worth, including virtual digital assets, for supply of such actionable claims is paid or

conveyed to him or through him or placed at his disposal in any manner, and all the provisions of this Act shall apply to such supplier of specified actionable claims, as if he is the supplier liable to pay the tax in relation to the supply of such actionable claims.

Amendment to Section 24

Section 24 of the Act provides the list of persons to be registered compulsorily under the Act.  The amendment inserted a new sub clause (xia).  According to the newly inserted section 24(xia) every person supplying online money gaming from a place outside India to a person in India is required to be registered compulsorily. 

Amendment to Schedule 3

Schedule 3 gives the list of activities or transactions which shall be treated as neither as a supply of goods nor a supply of services.  Clause 6 to Schedule 3 gives the list - actionable claim other than lottery, betting and gambling.  The amendment brought amendment to clause 6 and after amendment it will be read as - Actionable claim other than specified actionable claims.

Amendment to ‘IGST Act’

The amendment Act brought amendments to Integrated Goods and Services Tax  Act, 2017 (‘IGST Act’ for short) also vide Notification No. 31 of 2023, dated 18.08.2023.

Amendment to section 2(17)

The amendment Act substituted a new section for Section 2(17)(vii).  Section 2(17)(vii) provides that ‘online information and database access or retrieval services’ means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply impossible to ensure in the absence of information technology and includes electronic services such as ‘online gambling’.  The amendment substituted the words ‘online gaming, excluding the online money gaming as defined in clause (80B) of section 2 of the Central Goods and Services Tax Act, 2017.

Amendment to section 5(1)

Section 5(1)  of the IGST Act provides that subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. 

The proviso to this section provides that   the integrated tax on goods  imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962. 

The amendment Act provides for the insertion of the words ‘other than the goods as may be notified by the Government on the recommendations of the Council’ after the words ‘integrated tax on goods’.

Amendment to section 10

Section 10 of the IGST Act deals with the place of supply of goods other than supply of goods imported into, or exported from India.  The Amendment Act inserted a new clause (ca) to Section 10(1) which provides that where the supply of goods is made to a person other than a registered person, the place of supply shall, notwithstanding anything contrary contained in clause (a) or clause (c), be the location as per the address of the said person recorded in the invoice issued in respect of the said supply and the location of the supplier where the address of the said person is not recorded in the invoice.

Insertion of new section 14A

The amendment Act inserted a new section 14A which is a special provision for specified actionable claims supplied by a person located outside taxable territory.

• Section 14A(1) provides that a supplier of online money gaming as defined in clause (80B) of section 2 of the Central Goods and Services Tax Act, 2017), not located in the taxable territory, shall in respect of the supply of online money gaming by him to a person in the taxable territory, be liable to pay integrated tax on such supply.
• Section 14A(2) provides that for the purposes of complying with provisions of sub-section (1), the supplier of online money gaming shall obtain a single registration under the Simplified Registration Scheme referred to in sub-section (2) of section 14 of this Act.  Any person located in the taxable territory representing such supplier for any purpose in the taxable territory shall get registered and pay the integrated tax on behalf of the supplier.  If such supplier does not have a physical presence or does not have a representative for any purpose in the taxable territory, he shall appoint a person in the taxable territory for the purpose of paying integrated tax and such person shall be liable for payment of such tax.
• Section 14A(3) provides that in case of failure to comply with provisions of sub-section (1) or sub-section (2) by the supplier of the online money gaming or a person appointed by such supplier or both, notwithstanding anything contained in section 69A of the Information Technology Act, 2000, any information generated, transmitted, received or hosted in any computer resource used for supply of online money gaming by such supplier shall be liable to be blocked for access by the public in such manner as specified in the said Act.