Fortune 365 is an online money gaming platform operating from UAE. It provides its users a platform to play and win money in different games that…

CA Final · Indirect Tax Laws · RTP · May 2024
Fortune 365 is an online money gaming platform operating from UAE. It provides its users a platform to play and win money in different games that are available on its portal. In the month of December, Player A, an unregistered person located in India, deposited an amount of 10,000 (inclusive of GST) in the master wallet available on the portal of Fortune 365. Subsequently, following transactions were undertaken by Player A in said month: i. Player A utilized the amount of 2,000 from the master wallet towards playing a virtual racing game on the portal. As a winning amount, 10,000 was credited to the master wallet of Player A. ii. On another portal operated by Fortune 365 in the name of Bet 180, Player A placed a bet of face value of 11,000 on an international wrestling match. The amount of such bet was paid by the master wallet of Player A. However, he lost the bet and hence the bet amount of 11,000 with applicable taxes was transferred from the master wallet to the bank account of Bet 180. iii. Player A transferred the balance amount from the master wallet to his bank account after the aforesaid transactions. Assume all the above transactions to be exclusive of GST unless otherwise specified. iv. Rate of GST applicable is 28% (Please ignore the bifurcation of GST amount into CGST, SGST and IGST.) Based on the information provided above, answer the following questions, providing brief reasons: (1) Compute the total GST payable on the aforesaid given transactions. (2) Determine the net amount transferred by Player A to his bank account after the aforesaid transactions. (3) Ascertain whether Fortune 365 is required to obtain registration under GST in India. Will your answer be different if Player A is registered under GST in India?

Suggested Answer and Working Notes:

The value of online money gaming related supply shall be determined as per rule 31B. As per said rule, the value of supply of online gaming, including supply of actionable claims involved in online money gaming, shall be the total amount paid or payable to or deposited with the supplier by way of money or money's worth, including virtual digital assets, by or on behalf of the player. Further, rule 31A provides the manner of determining the value of supply of actionable claim in the form of chance to win in betting. The value for such supply shall be 100% of the face value of the bet. In accordance with the above provisions: (1) Total GST payable on given transactions is as follows: (i) Value of supply of online money gaming = Total amount deposited with the supplier by the player in terms of rule 31B = Initial deposit of 10,000 (inclusive of GST) by Player A with Fortune 365 after excluding GST = 7,812.50 (₹ 10,000 × 100/128) GST payable = 7,812.50 × 28% = 2,188 – [A] (ii) Value of supply of online bet = 100% of the face value of the bet in terms of rule 31A = 11,000 GST payable = 11,000 × 28%) = 3,080 - [B] Total amount of GST that would be collected by the Government on the given transactions = [A] + [B] = 5,268 (rounded off) (2) Total amount transferred by Player A to his bank account from the master wallet is as follows: Particulars Amount (₹) Initial Deposit 10,000 Less – GST on deposit 2,188 Less – Payment for virtual racing game 2,000 Add – Winning from virtual racing game 10,000 Less – Payment for bet placed on Bet 180 11,000 Less – GST on the bet place on Bet 180 3,080 Net balance available for transfer 1,732 (3) As per section 24(xia), every person supplying online money gaming from a place outside India to a person in India shall be required to obtain registration on a mandatory basis in India. Accordingly, Fortune 365 being a supplier of online money gaming operating from UAE and supplying services in India shall be liable to obtain registration compulsorily in India. The answer will not change irrespective of the fact that Player A is registered under GST in India or not.

Topics: Value of Supply

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