TDS to be applied on all winnings from online gaming from April 1, 2023

Tax Deduction at Source or TDS is a special amount that is deducted when a certain payment, say sala🌄ry, rent or professional fees etc is made. The person who receives the payment has the liability to pay the TDS while the person whꦉo makes the payment deducts it at source.

This concepꦿt was introduced in Indi𒆙a back in 1922 and it will now be effective on online gaming applications from 1 April, 2023 as against an earlier provision of 1 July, 2023.

This comes after the stakeholders of the online gaming industry approached the PM’s office and the Central Board of Direct Taxes (CBDT) on 23rd February to oppose changes in TDS a♏nd GST on the sector.

Before this, a letter was directed to the PM’s office on February 9th requesting not to club online gaming with gambling, horꦛse raci♕ng 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 C💯ouncil meeting which was held on 20th February.

According to th🦋e Mint, three online gaming industry bodies, including E-Gaming Federation (EGF), All India Gaming Federation (AIGF) and Federation of Indian Fantasy Sports (FIFS), wrote to the CBDꦍT to reconsider the changes in TDS regime.

As it stands, online gaming companies charge 30% TDS on any winnings which are withdrawn by the users in excess of ₹10,000 in each transaction. Although the ₹10,000 threshold will remain from 1st April,ꦆ it ꦇwill 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’ abilit💯y 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.