Amidst the Income Tax Department’s efforts to check tax evasion in the gaming industry, winners of online games will now have to pay a total tax of 30 percent along with interest without any exemption. Along with this, they will have to pay an additional 25-30 percent on tax and interest. Winners of online games who fail to pay taxes by the stipulated time can be fined heavily.
Central Board of Direct Taxes (CBDT) Chairman Nitin Gupta said in an interview that the Income Tax Department is keeping an eye on the tax evasion in the gaming industry. To avoid any action, the winners of the online game should disclose their income along with filing the updated Income Tax Return (ITR-U) and pay the applicable taxes.
Normally the last date for filing ITR-U is 24 months after the end of the relevant assessment year. The last date for filing ITR-U for the financial year 2021-22 is March 31, 2024. He said the winners of the games of various gaming portals should use ITR-U. In this, there is a provision to come forward and pay tax to avoid penalty.
Clarification on new TDS provision soon
The CBDT will soon issue clarifications on the procedures for implementation of the new TDS provisions for various stakeholders, especially for banks. These TDS provisions pertain to profits or pre-conditions received in any business or profession. Gupta said that the board will issue an official circular on the subject. This includes issues like one-time settlement (OTS) that banks are facing.
ITR-U is beneficial for them
One lakh ITR-Us have been filled since they were presented in the 2022 budget. Due to this, tax of 28 crores has been collected.
- This benefits those who do not knowingly or unintentionally pay taxes on money received from gaming, betting, and lottery.
Gaming portal distributed 58,000 crores
A gaming portal distributed 58,000 crores as winnings over the course of three years. It has more than 8 million users.
- On February 15, the CBDT had raided 29 premises of a business group associated with the gaming industry.
Increased reach of Income Tax Department to new areas
The CBDT chairman said, the reach of the Income Tax Department has increased to new sectors of the economy to check tax evasion. We are not restricting ourselves to just real estate or developers. Now we are knocking on new areas and sectors of the economy. These also include asset reconstruction companies, gaming and betting activities. They are analyzing the data on foreign assets of Indian nationals, he said.
- We have got all the information through Panama, Paradise, and Pandora Papers till 2019. By linking these with CRS and FATCA, we are widening the base. The Income Tax Department is investigating.