Have you ever seen the craziness of online gaming these days?
Let me tell you what online gaming means, simply, playing games over the internet, right!
These online games have attracted players from a variety of ages, nationalities, and occupations.
Some examples of online gaming would be sports wagering, fantasy sports, online lottery tickets, keno, and casino games such as poker, roulette, and slots.
But with all these games and their winnings, do you really know, the tax impacts on the prize moneys?
Yes, these winnings are taxed in India. With the popularity of online gaming increasing, the Indian government is planning to tax wins from these games.
Do you Know?
Tax Department has unearthed Rs. 58,000 crore in winnings of players on Indian gaming app and winners have to pay about Rs 20,000 crore in tax.
Taxpayers with such unreported earnings for the two most recent assessment years, 2019–20 and 2020–21, have been prompted by authorities to file taxes.
Thanks to smartphones and tablets, the online gaming sector has undergone a significant change during the past 10 years. The gaming sector has rapidly expanded as a result of investments made by significant international firms, with the Asia-Pacific area accounting for close to half of all global gaming revenues.
Online gaming typically uses a subscription business model. Users only pay when they opt to access premium content and make in-app purchases; the majority of games are free to download. While some games are played only for the excitement, other games give players the possibility to earn actual cash. Some of the games that allow gamers to make real money are poker, rummy, sporting events like football and cricket, tests, and battleground games. The younger generation has been encouraged to become avid gamers by the fact that anyone may make money from online gaming.
How are online gaming earnings taxed in India?
Section – 115BB of the Income Tax Act deals with Tax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever. And while submitting income tax returns, keep in mind that the income from such games has to be reported under the head "Income from Other Sources".
What is the tax rate on winnings from online gaming?
Online gaming winnings are subject to a flat tax of 30%, excluding cess. Without the advantage of the basic exemption ceiling, the net rate after cess comes to 31.2%.
Tax evasion in the gaming industry has come under the radar of the tax department. So, don’t even think you can escape.
As per Section 194B of Income Tax Act says, TDS is only applied if the win amount exceeds Rs.10,000, is outlined in. Such revenue cannot be offset by any deductions or expenses.
Players should be aware that winnings from which TDS has been deducted still require disclosure in income tax forms. The PAN and bank account information of the players are collected by the gambling companies, but the players obligations do not end there. The reporting of such earnings must be done both when the gamer's tax returns are filed and at that time.
Be attentive if you are also having such wins, don’t forget tax implications on the same.
