Introduction:

The imposition of goods and services tax (GST) on online gaming has sparked a lively debate, raising various concerns among stakeholders. This discussion centers on the recent amendments recommended by the GST Council and enacted by Parliament, effective from October 1, 2023. Despite these changes, uncertainties linger, especially with the Supreme Court reviewing a Karnataka High Court decision on the matter. This post sheds light on a particular ambiguous issue – the classification of online gaming as ‘goods’ under the new provisions, a distinction crucial due to the divergent treatment of goods and services in GST law.

Review of the New Statutory Regime:

To grasp the intricacies of the issue, let’s examine key amendments in the Central Goods and Services Tax Act, 2017 (CGST Act) and the Integrated Goods and Services Tax Act, 2017 (IGST Act).

1. Modification in the Scope of OIDAR Services:

The IGST Act previously included “online gaming” under “online information and database access or retrieval” (OIDAR) services. However, recent amendments narrowed the scope, excluding “online money gaming.” This implies that while online gaming remains part of OIDAR services, online money gaming is no longer taxed as a service.

2. “Specified Actionable Claim” as a New Species:

The treatment of “actionable claims” under GST law underwent significant changes. A new category, “specified actionable claim,” was introduced, encompassing activities like betting, casino, gambling, horse racing, lottery, and online money gaming. Notably, this class is now subject to GST, marking a departure from the previous exclusion of actionable claims.

3. Inclusion of New Entries in Customs Tariff:

Simultaneously, the Customs Tariff Act, 1975, underwent amendments, reflecting the “specified actionable claim” scheme introduced in the GST law. Though no customs duty is levied on these claims, their inclusion in the customs framework underscores their classification as goods.

4. Distinct Scheme for Cross-Border Online Money Gaming:

In an added layer of complexity, GST laws now feature a unique provision for the levy of GST on cross-border online money gaming. Unlike other goods, these transactions fall under the IGST Act, diverging from the customary customs law application.

Conclusion:

The intricate interplay between goods and services in the taxation of online money gaming exemplifies the complexities of fiscal legislations. The inherent ambiguity in classifying online money gaming as goods despite its intrinsic service nature raises questions about its taxability. As the legal landscape evolves, it remains to be seen how these nuances impact the taxation of online money gaming.

1. GST Council Meetings:
   • 50th Meeting: Held on 11-7-2023. For details, refer to the Press Release.
   • 51st Meeting: Held on 2-8-2023. Find more information in the Press Release.
2. Legal Case: Gameskraft Technologies (P) Ltd. v. Directorate General of Goods and Services Tax Intelligence, 2023 SCC OnLine Kar 18.
   • Details about the case are not provided. Please provide specific information or questions regarding this case.
3. Legal Case: Directorate General of Goods and Services Tax Intelligence v. Gameskraft Technologies (P) Ltd., SLP(C) No. 19366-19369/2023, order dated 6-9-2023.
   • The case involves the Directorate General of Goods and Services Tax Intelligence and Gameskraft Technologies (P) Ltd. The order was dated 6-9-2023.
4. IGST Act, 2017, S. 2(17):
   • Reference to a section in the Integrated Goods and Services Tax Act, 2017.
5. IGST Act, 2017, S. 2(17), as amended by the Integrated Goods and Services Tax (Amendment) Act, 2023:
   • Mention of an amendment to Section 2(17) of the Integrated Goods and Services Tax Act in 2023.
6. CGST Act, 2017, S. 2(80-A), inserted by the Central Goods and Services Tax (Amendment) Act, 2023:
   • Reference to an insertion in Section 2(80-A) of the Central Goods and Services Tax Act in 2023.