online games There is good news for those earning money from The Income Tax Department has said that gaming platforms are not required to deduct tax at source (TDS) if the prize money in online games is less than Rs 100. The Central Board of Direct Taxes (CBDT), the apex organization of the Income Tax Department, by notifying Rule 133 of the Income Tax Rules, has laid down the procedure and manner relating to TDS on online gaming. Accordingly, the net amount won in an online game will be calculated after deducting the total deposits.
Earlier TDS was asked to be deducted on all the amount
Accordingly, online gaming platforms will be required to deduct TDS only if the net winning amount exceeds Rs 100. Earlier in the Finance Act 2023, a new section 194BA was included in the Income Tax Act, 1961, which asked online gaming platforms to deduct income tax on the net winning amount deposited in the account of the person concerned.
Finance Ministry can play skill, luck
The Finance Ministry is considering classifying online gaming as a game of skill and luck and levying Goods and Services Tax (GST) at different rates. Online games where the decision of winning or losing depends on a certain result or is in the nature of betting or gambling will attract GST at the rate of 28 per cent. Online games of skill could be taxed as low as 18 per cent. The final decision on taxation of online gaming will be taken by the GST Council in its next meeting in May or June. At present, online gaming attracts 18 per cent GST. The tax is levied on the total fee charged by the online gaming portal.
