The Finance Bill 2023 gives gaming platforms the responsibility of ensuring that taxes are paid by users on the entire net winnings. (Representational Image)
Till now, TDS was deducted only when it exceeded the limit of Rs. 10,000.
In the Union Budget 2023-24, Finance Minister Nirmala Sitharaman proposed a 30% tax on net winnings from online gaming. The minister also proposed to remove the cap of Rs 10,000 for Tax Deducted at Source (TDS). Now these changes have come into effect from 1 April. This means that you will have to pay tax on the income earned from playing online games. These proposed amendments to the Finance Bill have been approved by both the Houses of Parliament.
Here’s what players need to know:
Till now, TDS was deducted only when it exceeded the limit of Rs. 10,000. But, there will be no such parameter under the Financial Bill 2023. TDS will be deducted from every amount won by the gamer online.
As per the new amendments made to the law, gaming companies will charge 30% TDS on any earnings that customers want to withdraw.
The budget seeks to levy withholding tax on the entire net winnings of any such use of online gaming platforms. Thereafter, the gaming industry will need to revamp its strategy as these provisions along with the ongoing discussions in the GST Council may affect the user psyche.
If the amount is not withdrawn by the user, tax will be deducted at source at the end of the financial year.
Revenue Secretary Sanjay Malhotra told reporters that the tax would be levied on the net winnings on the total value.
Two new sections have been proposed in respect of online gaming section 115BBJ to tax such income at the end of the financial year at 30 per cent and section 194BA to provide for TDS on net winnings at the end of the financial year.
The Finance Bill 2023 gives gaming platforms the responsibility of ensuring that taxes are paid by users on the entire net winnings.
With the coming of these changes, the online gaming industry aims to radically adapt to the new TDS regime. These amendments will enable the industry to streamline tax compliance as well as educate around 200 million gamers about the new regime.
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