TDS to be applied on all winnings from online gaming from April 1, 2023
Tax Deduction at Source or TDS is a specia🐎l amount that is deducted when a certain payment, say salary, rent or professional fees etc is made. The person who receives the payment has the liability to pay the TDS while the person who makes the payment deducts it at source.
This concept was introdu✱ced in India back in 1922 and it will now be effective on online gaming applications from 1 April, 2023 as a✃gainst an earlier provision of 1 July, 2023.
This comes after the stakeholders of t𓄧he online gaming industry approached the PM’s office and the Central Board of Direct Taxes (CBDT) on 23rd Februa��ry to oppose changes in TDS and GST on the sector.
Before this, a letter was directed to the PM’s offic❀e🤡 on February 9th requesting not to club online gaming with gambling, horse racing and casinos.
The letter referred to a long standing debate on the approximate taxation on online gaming. A committee led by Meghalaya’s CM Conrad Sagma, submitted a report to the GST council. However, the matter has not 🤪been taken up for discussion yet in the 49th Council meeting which was held on 20th February.
According to the Mint, three online gaming industry bodies, including E-Gaming Federation (EGF), All India Gaming Federation (AIGF) and Federation of Indian Fa❀ntasy Sports (FIFS), wrote to the CBDT to reconsider the changes in TDS regime.
As it stands, online gaming companies charge 30% TDS on any winnings which are withdrꦬawn by the users in excess of ₹10,000 in each transaction. Altho🌟ugh the ₹10,000 threshold will remain from 1st April, it will apply on a user’s annual earnings.
“Online gaming has the potential to emerge as the next big new age export economy for India, but imposing 28 per cent GST will prematurely stifle the sector. There are 🌟many early stage companies in the sector. However, increasing tax rates for the sector will take away companies’ ability to survive. It also affects creators, whose earnings will be stifled," Saumya Singh Rathore, co-founder of Delhi-based gaming💙 firm Winzo Games said as reported by the Mint.
