I-T dept collects Rs 600 crore in TDS from online gaming companies in H1FY24

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The Central Board of Direct Taxes (CBDT) chairperson Nitin Gupta on Tuesday revealed that the IT department has collected Rs 600 crore in TDS from online gaming companies in the current financial year till September end.

The new TDS regime took effect from April 1, 2023, after a new section 194BA was introduced to the Income Tax Act, 1961. Under the new rule, online gaming companies will now have to deduct 30% amount on all winnings over Rs 100 as TDS.

Gupta said that the new rules are simplified and easy to comply with for both online gaming firms and the players as compared to the previous ones, reported The Economic Times.

As indicated above, the winning threshold has changed to Rs 100 from Rs 10,000. Users used the earlier rule to their advantage in order to avoid paying the tax. The new TDS rule also makes all players including casual gamers pay TDS regardless of their winnings.

Some online gaming stakeholders initally were skeptical but ultimately welcomed the decision, calling it an easier way to calculate TDS. They also lauded the decision to implement the new TDS from April, at the start of the financial year, as implementing it earlier would have complicated the imposition and filing aspects.

Meanwhile, online real money gaming companies now face the increased GST rate of 28% on initial deposits. The new law has come into effect from October 1, after a number of requests for reconsideration from the industry.

According to industry experts, the new GST policy will lead to a decline in user engagement, resulting in slower growth of the Indian online gaming industry. The GST changes, however, do not affect the esports and casual gaming sector.