Accounting of Companies like MPL & Rummy.com

Supply

According to the GST law under the CGST Act 15 (1), the supply value of goods or services will be as per the transaction value. This means that the price actually paid or payable for a specified supply of goods or services is transaction value.

However, in the case of online card games, the platform charges an amount from the players, which is also used in paying incentives, prizes or rewards. For instance, an online card gaming platform gets Rs. 2 lakhs from the players’ deposit and other payments. The platform, in turn, uses Rs. 1 lakh of this amount to pay the incentives, rewards, etc. This means the platform has Rs. 1 lakh in hand.

In section 15- it states that the supply value of goods or services will be the actual price paid or payable for a supply of goods or services. Note that the price paid or payable is the value of the supply.

In the case of the example above, the amount actually paid to the platform is Rs. 1 lakh and this is what helps the game to run covering other incidental expenses. The amount not ‘actually paid’ to the platform should not be taxed. However, there are no specific laws to date under GST for online games and it would be really helpful to see this take place in the near future.