Computation of Income Tax on Online Gaming
March 15, 2023
E-Gaming
E-Gaming stands for Electronic Gaming or Online Gaming.
Nowadays, India became more trending in online gaming, as Youth pursue those games passionately from playing them for fun to converting them into full-time jobs. For this purpose, Government has introduced a section i.e. 194BA which gives information about winnings from online games.
Earlier, TDS was deducted only if the threshold limit was crossed i.e. if earnings were more than or equal to Rs.10,000. But now it is mandatory for every person who participates in online gaming and wins any Income to have TDS deducted by the payer at the time of withdrawal or at the end of the Financial Year whichever is earlier.
Here the Net winning from any Lottery, Crossword Puzzle, Card Game, or any other game has to deduct even if it is wholly cash or wholly in kind, or partly in cash and partly in kind. The participant can withdraw his/her net winnings only after paying income tax to the Government even though the winnings were received in kind.
Rate of TDS under Sec 194BA
The payer has to deduct tax at the flat rate of 30% of the Net winnings.
What about the taxability of this income?
This Income is taxable in the head Income from Other Sources.
What about set-off and carry forward of losses from online gaming?
Scenarios:
1) Can we set off current losses with previous gains from online gaming or any other heads? The answer is No
2) Can we set off current gains with previous losses from online gaming or any other heads? Again, the answer is No
3) We also can’t carry forward losses from online gaming
Example:
Mr. Arjun has an Income of ₹8,00,000 from a Salary & earnings of ₹3,00,000 from Card Games. What is the Total Income Tax?
|
PARTICULARS |
OLD TAX REGIME |
NEW TAX REGIME |
||
|
Income from Salary |
₹8,00,000 |
|
₹8,00,000 |
|
|
Less: Standard deduction |
₹50,000 |
|
₹50,000 |
|
|
|
|
₹7,50,000 |
|
₹7,50,000 |
|
Income from Other Sources |
|
₹3,00,000 |
|
₹3,00,000 |
|
Total Income |
|
₹10,50,000 |
|
₹10,50,000 |
|
|
|
|
|
|
|
Income tax thereon @ normal rate ₹7,50,000 |
0 to 2.5lacs |
NIL |
0 to 3lacs |
NIL |
|
|
2.5lacs to 5lacs |
5% - ₹12,500 |
3lacs to 6lacs |
5% - ₹15,000 |
|
|
5lacs to 7.5lacs |
20% - ₹50,000 |
6lacs to 7.5lacs |
10% - ₹25,000 |
|
Income tax at special rate @ 30% ₹3,00,000 |
|
30% - ₹90,000 |
|
30% - ₹90,000 |
|
Income Tax |
|
₹1,52,500 |
|
₹1,30,000 |
|
Add: Health& Education cess @4% |
|
₹6,100 |
|
₹5,200 |
|
TOTAL INCOME TAX |
|
₹1,58,600 |
|
₹1,35,200 |
Note: Above details are meant for generalized situations and shall not be used as a legal basis for any particular situation readers may have. We do provide tax consultations for specific scenarios and can be reached through our contact us form.
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