AAR: Supply of games online attracts 18% GST

No Comments

The GST Authority for Advance Rulings (AAR – Maharashtra bench) has held that supply of online games sent by an email attachment or via a secure link to customers in India will attract goods and services tax at 18%.

The applicant, Amogh Bhatawadekar, sold online games via a website MMOPLAYSTORE.com. He procured online games from suppliers located in China and the US. The games were stored on the cloud and then sold to customers, who paid through PayPal.

He sought an advance ruling on various issues. To begin, with the AAR held that section 2 (17) of the Integrated Goods and Services Tax (IGST) Act defines “online information and data-based access or retrieval services” (OIDAR) to include online gaming. Thus, the online games (e-goods) supplied by him would be considered as services. Further, even if the cloud is located outside India, the customers are in India and GST would apply.

However, owing to lack of specific details for determining the place of supply for OIDAR, the AAR did not give a ruling as regards the applicability of GST in case the customers are from abroad and are remitting foreign exchange.

As regards supply of the e-goods to him, the AAR, in its order dated December 15, held that in case of procurement from foreign suppliers and supply from out of India, the applicant has to discharge IGST liability under the reverse charge mechanism.

The AAR dismissed the contention of the applicant that the e-goods are not received by him (seller) in India, but are stored on a cloud, hence these cannot be considered to be imports in India and would be outside the purview of the reverse charge mechanism.

Source from: https://timesofindia.indiatimes.com/business/india-business/supply-of-games-online-attracts-18-gst-aar/articleshow/79847066.cms