Direct tax dept to issue notices to gamers and gaming cos

Published on:

Central Board of Direct Taxes (CBDT) is likely to issue clarification on taxation of gains made via winning through online gaming, reported CNBC-TV18.

In a related development the direct tax department has issued notices to 7 gaming companies and several top gamers with estimated tax claim ranging to INR 28,000 crores, reported Economic Times.

At present, winnings from games of chance are liable for tax at a flat rate of 30 percent. Each win is taxed. Similar to taxation of lottery and cryptocurrency, loss in online real money gaming cannot be adjusted against the win.

In case of games of skill, the same is taxed under “Income from Other Sources.” The main contention appears to be the department considering the winnings related to “games of chance” while assessees claim that online games are skill predominant.

The action comes close on the heels of the GST intelligence wing issuing a similar notice earlier this month to a Bengaluru-based online gaming portal GamesKraft Technologies Pvt Ltd demanding Rs 21,000 crore in taxes, interest, and penalty. Gameskraft has challenged the notice in a writ petition before Karnataka High Court.

“We have the data and are in the process of issuing notices to some of the players and companies,” Nitin Gupta, chairman of the Central Board of Direct Taxes (CBDT) told Economic Times, without giving further details. Gupta had earlier said the I-T department was closely watching the online gaming business after authorities found instances of tax evasion.

Currently, an inter-ministerial group, set up by the government, is working on a framework to regulate online gaming. The committee reportedly plans to bring rules governing the amount of money an individual player spends on the games.

The mobile gaming market in India is projected to hit a $5 billion opportunity by 2025 from the current $1.5 billion, according to a recent Sequoia India and Boston Consulting Group report