The Tax Publishers

Finance Bill, 2023--Online Gaming

Taxation of Winnings From Online Gaming

CA. Nisha Bhandari

Nowadays online gaming has become very popular but under the existing scheme of law there is no clarity regarding taxation of winnings from online gaming. The Finance Bill, 2023 proposes to insert two new Sections namely, Section 115BBJ and Section 194BA in the Income Tax Act so as to provide specific provision for taxation and tax deduction in respect of winnings from online gaming. The present write-up aims at analysing these new provisions.

1. Background

Under the existing provision Section 194B provides for deduction of tax at the rate of 30 per cent, while making payment of any income by way of lottery or crossword puzzle or card game and other game of any sort to any person. The tax under Section 194B is required to be deducted when such income exceeds Rs. 10,000. In recent time it is seen that there has been a rise in the users of online games and there is no clarity regarding taxation and TDS provision in respect of winnings from different nature of online gaming. The Finance Bill, 2023 has proposed certain amendments in the Income Tax Act with a view to provide specific provision for taxation of such winnings.

2. Insertion of new Section 115BBJ

The Finance Bill, 2023 proposes to insert a new Section 115BBJ w.e.f. 1-4-2024 with regard to tax on winnings from online games. The proposed Section 115BBJ provides that notwithstanding anything contained in any other provisions of this Act, where the total income of an assessee includes any income by way of winnings from any online game, the income-tax payable shall be the aggregate of -

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