TDS and Taxability on Net Winnings from Online Games: Budget 2023

The Union Finance Minister Nirmala Sitharaman was presented the Union Budget 2023 today at parliament.

Before Budget 2023, We anticipated that the Earning from Online Games needs to Taxed and Various Suggestion were also made on this by tax experts and market experts.

Today in Budget Session, the Finance Minister described the need to put tax on Net Winnings from Online Games and hence, net winning comes under the purview of Tax.

Let’s look into it, What it is?

TDS and Taxability on Net Winnings from Online Games

Section 194B of the Act provides that the person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle or card game and other game of any sort in an amount exceeding ten thousand rupees shall, at the time of payment thereof, deduct income-tax thereon at the rates in force.

Section 194BB of the Act provides for similar provisions for deduction of tax at source for horse racing in any race course or for arranging for wagering or betting in any race course.

Section 115BB of the Act provides for the rate of tax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature.

It is seen that deductors are deducting tax under section 194B and 194BB of the Act by applying the threshold of Rs 10,000/- per transaction and avoiding tax deduction by splitting a winning into multiple transactions each below Rs 10,000/-. This is against the intention of legislature.

It is also seen that in recent times, there has been a rise in the users of online games. There is a need to bring in specific provisions regarding TDS and taxability of online games due to its different nature, being easily accessible vide the Internet and computer resources with a variety of playing options and payment options.

To Read More Download PDF Given Below: