New tax rule: No TDS on online gaming winnings up to Rs 100, know complete guideline

With the ever-growing popularity of online gaming platforms, a new development has caught the attention of the Income Tax Department. Effective from July 1, 2023, the Central Board of Direct Taxes (CBDT) has released comprehensive guidelines pertaining to Tax Deducted at Source (TDS) on earnings exceeding Rs 100 from online gaming activities. It is imperative to note that not only actual earnings, but also bonuses, referral incentives, and other such inducements shall be considered in the taxable amount subject to TDS.

Delving into the specifics of the CBDT guidelines, it is outlined that if a player's winnings fall below the threshold of Rs 100, online gaming platforms are relieved from the obligation of deducting TDS. However, if the gaming company offers any form of bonuses, referral incentives, or other similar benefits, they must be factored into the taxable income deposit according to the prevailing income tax regulations. Remarkably, even deposits made in the form of coins, coupons, vouchers, or counters shall be deemed as taxable deposits.

The circular further stipulates that online gaming companies that have failed to deposit taxes for the month of April can rectify the situation by remitting the outstanding amount alongside the May tax payment before June 7. Any delays beyond this date will result in penalties. Furthermore, the income derived from these gaming activities must be duly declared in the income tax declaration for the fiscal year 2023-24.

Under Rule 133 of the CBDT, it is explicitly stated that regardless of the nomenclature associated with a user account registered with an online gaming company, the rules shall be universally applicable. Whether it pertains to taxable or non-taxable deposits, winnings credited or withdrawals debited, all transactions shall be subject to scrutiny. Even users with multiple accounts will find their net winnings calculated individually, with deposits, withdrawals, and balances across all accounts falling within the purview of taxation.

The landscape of online gaming and taxation intricacies has now been illuminated, providing users and gaming companies alike with a comprehensive understanding of their obligations. As the CBDT ushers in these regulations, the realm of online gaming platforms will witness a new chapter in its ongoing evolution.

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