Connect with us

People & Lifestyle

How is Online Gaming Taxed in India?

Published

on

Online gaming has been growing at an exponential rate in India, involving millions of players. As online gaming spreads in the country, the concern regarding how it will be taxed is also coming to light, establishing a need to understand the tax structure between the players and operating parties. This blog explores the tax structure and regulations for online gaming in the country.

Tax Framework of Online Gaming

Below are the Indian tax frameworks for online gaming:

Income Tax

Online gaming winnings are taxable in India. According to the Income Tax Act of 1961, such income is reflected under “Income from Other Sources.” Thus, income from online gaming needs to be disclosed and taxed.

Tax Deducted at Source (TDS)

According to Section 194B of the Income Tax Act, if the amount you win playing any online game exceeds INR 10,000, there will be a mandatory TDS at the rate of 30%. The TDS is directly debited by the gaming platform before the disbursal of winnings.

Advertisement

 

For instance, even if you earn INR 50,000, the site charges INR 15,000 as TDS and credits an amount of INR 35,000 to your account. For this TDS, the site will issue a TDS certificate to you, which is Form 16A, to be used at the time of filing your income tax return.

Goods and Services Tax (GST)

In addition to IT, there is also the charging of the Goods and Services Tax (GST) on online gaming. The rate at which GST is charged on online gaming differs according to the nature of the game:

Games of Skill vs. Games of Chance

  • Games of Skill: These games which are distinguished as being skill-based—for example, games relating to rummy, poker, and fantasy sports—stand at the rate of 18% under the GST.
  • Games of Chance: Gambling, betting, and lottery are supreme examples of games of fate and are charged at a higher rate under GST to the rate of 28%.

 

In the above cases, the charge of GST would be on the pay-out or gross gaming revenue (GGR) and not directly on the winnings drawn by the player.

Advertisement

Compliance For Players

Gamers need to be aware that they are subject to tax in India. As your gross total income from all sources, which is inclusive of the income that you generate by way of gaming, exceeds the limit of basic exemption, the Income Tax Act states that it is compulsory to file an income tax return. Hence, it is very crucial to record all the gaming transactions and TDS certificates properly while filing your return of income.

 

Learn more at 91.club to stay updated with the current development of online gaming and its taxation.

Compliance For Gaming Platforms

Here are some of the compliances for gaming platforms:

Advertisement

TDS

Platforms have to deduct TDS on winnings exceeding INR 10,000. They need to deposit the amount of TDS with the Government and furnish TDS certificates to players.

GST Registration and Payment

Gaming platforms are required to get registered under GST and are required to follow the GST regulations. These Platforms are required to charge the proper rate of GST and pay it over, based on the type of games they run.

Record Keeping

Platforms have to keep detailed records of all transactions, winnings, and taxes deducted. Transparency is key and thus can be used as proof during an audit.

Conclusion

Online gaming in India is taxable under both the Income and Goods and Services tax regulations. Players and platforms in use are supposed to understand and work within these provisions to avoid problems that may arise as interest or criminal cases. 

Advertisement

 

Once the industry is more mature, the government should instill a much-refined policy related to taxation to ensure fair taxation and compliance. Being abreast of those changes is key for all those working within the online gaming sector.



Advertisement
Advertisement
You want to bet with the best odds on every football match? bestbets.com.gh shows you the highest odds for all important games.