Tuesday, October 3rd, 2023

TDS rules amended on online gaming income

New Delhi. Changes in taxation of debt mutual funds and Rs. Budget 2023 has revised the TDS limit applicable on online gaming, besides giving minor relief to small taxpayers earning more than Rs. TDS will be effective on online gaming as per the amendment made in the Finance Bill 2023. The earning limit of 10,000 for online gaming has been removed and tax will have to be paid on any amount. Induslaw Partner Shashi Mathews says that the Finance Bill 2023 has been passed by the Lok Sabha. Taking into account the applications made by the gaming industry, the government proposed to introduce new TDS provisions applicable to online gaming. Apart from this, it was also proposed to deduct TDS at double the rate in case of non-compliance in return filing by the taxpayers concerned. These amendments have now been accepted. To ensure compliance with this provision, gaming operators may require documents from users.
The TDS limit on online gaming winnings has been removed in Budget 2023. This means that earlier TDS was to be paid on earnings above Rs 10,000, but now any amount of earnings will be taxed. Till March 31, 2023, TDS was applicable on winnings on online games when the winnings did not exceed Rs.10,000. Used to be more than From April 1, 2023, every Rs. TDS will be deducted for. TDS will be deducted at the rate of 30 per cent on winnings from online games.

Understand the math of deducting TDS on online gaming earnings with an example
Suppose an online gaming company offers Rs.1,000 to a person. 35,500 and that person gets Rs.35,500. 1,000 if the online gaming company wins. 34,500 after deducting the admission fee. But TDS will be deducted at the rate of 30%. This means Rs.34,500. 30% TDS in Rs.10,350. 24,150 will be deposited to the government and the remaining Rs. The winners of the online game will go to Shakht’s account.

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It is necessary to mention in ITR whether TDS has been deducted on income or not.
As per the current income tax laws, earnings from online gaming are required to be reported under the head ‘Income from other sources’ while filing Income Tax Return (ITR). It is to be noted here that irrespective of whether TDS is deducted from online gaming earnings or not, the concerned taxpayer has to report the same in his/her income tax return and pay income tax accordingly. But, if gaming earnings are not disclosed in ITR, TDS will be deducted at double the rate.

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