CBIC issues Notification No. 45/2023-Central Taxes to bring clarity to the valuation of supplies in the realm of online gaming and casinos

Margesh Rai

30 Mar, 2024

The Central Board of Indirect Taxes and Customs (CBIC) has on 6^th September 2023 issued notification no. 45/2023-Central Taxes relating to the Central Goods and Services Tax (CSGT) rules. These changes are intended to bring clarity to the valuation of supplies in the realm of online gaming and casinos. In the Central Goods and Services Tax Rules, 2017, after rule 31A, the following rules have been inserted:

Rule 31B- Value of supply in case of online gaming including online money gaming

Under this rule, the CBIC has outlined the valuation of supply concerning online gaming, which includes money gaming. The key provisions are as under:

1. The value of supply for online gaming including actionable claims associated with online money gaming is determined as the total amount paid or payable to or deposited with the supplier. This payment can be made in the form of money, money’s worth or virtual digital assets on behalf of the player.
2. It is essential to note that any amount returned or refunded to the player or any unused amount by the player cannot be deducted from the value of the supply.

Rule 31C- Valuation of Supply Actionable claims in case of casino

This rule relates to the valuation of actionable claim in the context of casinos. The following valuation criteria has been set forth:

1. The value of the supply of actionable claims in a casino is determined as the total amount paid or payable by or on behalf of the player. This payment can occur when purchasing tokens, chips, coins or tickets for use in the casino or when participating in casino events, games, competitions or activities where token, chips, coins or tickets are not required.
2. Similar to Rule 31B any amount refunded by the casino to the player upon returning tokens, chips, coins or tickets or through other means cannot be subtracted from the value of supply of actionable claims in the casino.

An important clarification provided in the notification is that any amount won by a player in an event, game, scheme, competition, or other activities and subsequently used for further gaming or betting without withdrawal will not be considered as an amount paid or deposited by the supplier. This exclusion is critical in determining the value of supply under Rule 31B and Rule 31C. This amendment brings much-needed clarity to the valuation of supplies in the domain of online gaming and casinos. As per the rules, the total amount paid or payable to the supplier is the primary determinant of the value of supply, with strict guidelines regarding deductions for refunds or unused amounts. The explanatory notes underscores the treatment of amounts won and reinvested in gaming or betting. Theses amendments will have a significant impact on the taxation and accounting practices in the online gaming and casino sectors, ensuring a more transparent and consistent approach to valuation.