BENGALURU: The online gaming industry had been seeing a lot of queries from the Income Tax Department on earnings made by players.
"A burning issue was the applicability of TDS. While there were some news reports on the removal of the threshold of Rs 10,000 for deducting tax, the Finance Bill has thrown an unexpected response. A new Section, 194BA is proposed to be inserted, which clarifies that winnings from any online game will now be covered under the said Section," said Shashi Mathews, Partner, IndusLaw.
Various provisions including the insertion of Section 115BBJ recognise the long ask of the industry that TDS is to be deducted from “net winnings”.
"Further, the sections proposed also clarify that TDS is to be deducted at the end of the Financial Year, assuming no withdrawals during the year, subject to computation mechanism. For withdrawals during the year, TDS will be at the time of such withdrawal on the net winnings comprising such withdrawal, as well as on the remaining amount of net winnings in the user account," he said.
On cryptocurrency
Though in the Economic Survey, the government mentioned cryptocurrency and flagged concerns citing crypto exchange FTX collapse, there was no mention of cryptocurrency in the budget.
“New income tax laws for crypto triggered only 10 months ago, moreover the TDS has been applied only for 7 months. The government needs to have enough data for an extended period of time, say 1-2 full financial years to analyse and do amendments as necessary. Hence no significant news was expected on the crypto industry anyway," said Sathvik Vishwanath, CO-Founder & CEO, of Unocoin.
Unocoin has been giving interim data to the government about transactions and the effect of the new tax regime on the crypto industry. "We may expect some amendments in due course or during the next budget," he said.