The government on Wednesday proposed to impose 30 per cent tax on the total amount won from online gaming. Along with this, the government has also announced to abolish the current limit of Rs 10,000 in the budget 2023.
The government on Wednesday proposed to impose 30 per cent tax on the total amount won from online gaming. Along with this, the government has also announced to abolish the current limit of Rs 10,000 in the budget 2023. In the budget 2023-24, it has been proposed to bring two new provisions for Tax Deducted at Source (TDS) on online gaming. These include a provision to levy 30 per cent tax on the total winning amount paid in a financial year and to remove the existing limit of Rs 10,000 for levying TDS.
What is the new rule?
If the amount is not withdrawn from the user account, tax will be deducted at source at the end of the financial year. After the budget, Revenue Secretary Sanjay Malhotra said that the tax will be imposed on the total amount won on the aggregate value. The other change in the TDS provision for online gaming has been the removal of the limit of Rs 10,000.
Malhotra said that the move came after the tax department came to know that some online gaming companies were keeping prize money below the limit, so that they are not covered under the provision of TDS. Sudin Sabnis, Partner, Nangia Andersen LLP said that online gaming has grown to a very significant figure in India. The mobile gaming industry in the country is expected to reach five billion dollars by the year 2025. In the past, this industry has been the subject of heavy monitoring by the government from the point of view of GST and Income Tax.
Discussion continues in GST Council as well
Sabnis said that in the budget, there is a proposal to introduce withholding tax on the total prize money of such users of online gaming platforms. He told that the gaming industry needs to change its strategy. Because this provision and the discussions going on in the GST Council can affect the user. According to him, this is similar to the taxation of cryptocurrencies introduced in the previous budget.
Let us tell you that the sector of online gaming is one of the fastest growing sectors in India. With the advent of 5G technology in the year 2023, the expansion of Next Gen gaming tech will accelerate further. With 15 billion downloads in 2022, India has the largest consumer base for mobile games in the world.
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