TDS Applicable on Winnings From Online Games April 1 Onwards The recently announced Finance Bill announced the TDS on online gaming would be effective from 1 April onwards instead of previously announced 1 July
By Saptak Bardhan •
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Gaming has been on an upwards trajectory in India. The sector has grown over the past couple of years, becoming one of the more profitable sectors. The Union budget 2023 announced an amendment to TDS threshold applicable to the online gaming and real gaming. The recently announced Finance Bill announced the TDS on online gaming would be effective from 1 April onwards instead of previously announced 1 July.
The Union Budget announced the removal of threshold for TDS on online gaming and real-money gaming winnings. TDS on winnings made on online gaming was only applicable if the winnings exceeded INR 10,000 in a financial year until FY2022-2023. However, 1 April onwards winnings from online games would be deducted for every rupee earned, net of entry fees (if any). 30 per cent TDS would be deducted on winnings.
"According to the amendments introduced in the Finance Bill that was passed in Parliament on Friday, the date on which the new TDS regime becomes applicable is April 1, instead of July 1. Accordingly, from April 1, TDS will be deducted on net winnings. This will help ease the compliance burden for gaming companies to the extent that it would have been difficult to compute tax if two different taxation regimes were to apply within one financial year. According to the earlier proposal, tax would have been assessed in accordance with the old regime from 1st April until the 30th of June, and according to the new tax regime from July 1 onwards," said Roland Landers, CEO, All India Gaming Federation.
The winnings from online gaming would be required to be filed under the 'Income from other sources' while filing income tax return (ITR), according to the current taxation laws.
"It would have been problematic if the act would have been applicable from July as the financial year starts from 1 April and the period from April to July would have been exposure and even potentially open to dispute with tax authorities. Grateful for the government to consider our prayers to make the changes," said Saumya Singh, co-founder, WinZO games.
Transaction-based games' revenues increased by 26 per cent in India and the number of paying players increased by 17 per cent, from 80 million in 2020 to 95 million in 2021, according to a report from EY FICCI (Federation of Indian Chambers of Commerce and Industry).
