New Delhi: The online gaming industry has seen massive growth over the last 10 years due to faster adoption of smartphones and cheaper data plans. With rising revenue from the online gaming industry many global players have invested money in this industry to make it attractive further for gamers. It is estimated that there are currently 30 crore online gamers in India. While certain games are played just for the thrill of it, other games like poker, rummy, sporting games such as cricket and football, quizzes, and battleground games are played to win money. As online games provides an opportunity to win money sitting at home, many people are getting attracted to become professional gamers.
However, it may be noted that in India the money you earn by playing online games are subject to income tax. As per tax experts, income earned from online gaming is considered as ‘Income from Other Sources’ while filing income tax returns (ITR) and it is taxed as per the provisions of Section 115B of the Income Tax Act. Amount won from betting, gambling, card games also fall under the perview of this section.
This income is taxed at a flat rate of 30% excluding cess without taking into account the basic exemption limit. For example an individual’s annual income is Rs 1.5 lakh and he has earned Rs 50,000 from online gaming, then his total income comes to Rs 2 lakh, which is below the basic exemption limit of Rs 2.5 lakh. But still the individual has to pay 31.2% tax on the Rs 50,000 including cess. Further, no deduction or expenditure is allowed to be claimed against such income.
Also, the entiry distributing the prize money is required to deduct TDS if the prize money exceeds Rs 10,000.
It may be noted that even if the entity distributing the prize money deducts TDS, the receiver is required to disclose this amount while filing his annual ITR.
If the prize is received in kind, which is a common thing in TV gaming shows, then tax will be applicable on the market value of the prize received in kind. The prize distributor in this case needs to deduct TDS before transferring the prize to the winner.
— to www.timesnownews.com