Budget 2023 has made a few critical amendments with regard to the taxation policies for online gaming which includes the elimination of the tax deduction at source (TDS) minimum threshold of Rs. 10,000 and providing clarifications about the taxability of online gaming.

Speaking on the development, Co-Founder of WinZO games, Paavan Nanda said, “It’s heartening to witness TDS for Online Gaming finding significant mention in this year’s Union budget presented by the Hon’ble Minister. The proposed changes lend clarity to the gaming companies, while creating an airtight accounting system for the exchequer. Aligning it with a player’s Net Winnings in a Financial Year seems like a just provision for the 500MM online gamers in India. Recognizing and carving out a separate clause in the act for ‘Online Gaming’ as against gambling or betting is in line with Meity’s recent draft amendment to IT rules for Online Gaming, and is a testimony to the government’s genuine intent to nurture the burgeoning sector.”

“The single most important aspect that the sector awaits clarity on and something that would decide its fate is the outcome from GoM on the GST. We are hopeful that the outcome would retain the current 18% tax slab on gross gaming commissions, and promise to overachieve the $10Trillion economy goal by our Hon’ble Prime Minister well before 2030,” Nanda added.

Chief Financial Officer of Mobile Premier League (MPL), Vikash Sureka said, “India’s online gaming industry is at a pivotal moment, and it’s great to see the government’s commitment to fostering its continued progress. The government in the Finance Bill has made a critical distinction between games of skill and games of chance, classifying them into separate sections. This signals the government’s recognition of the unique nature of each and the need for separate tax policies.”

“With the introduction of two new sections—194BA (for TDS of winnings from online games for online intermediaries) and 115BBJ, (for computation of taxes for those who earn income from winnings of online games)—the government has cleared ambiguities regarding TDS calculation for online gaming and simplifies the process for both companies and users,” said Sureka further.

“The Bill allows TDS to be calculated either at the end of the financial year or at withdrawal, streamlining settlements and returns for users. With this change, users who play multiple games will only have to pay tax at year-end based on their net winnings, eliminating the need to pay tax on notional credit. For companies, the TDS calculation process is simpler, improving compliance. This positive step for the skill-gaming industry has us hopeful for continued government support and guidance,” added Sureka.

“In addition, the regulations being drafted by the Ministry of Electronics and Information Technology (MeitY) will create a favorable environment for the industry to flourish. We eagerly await the government’s direction on this, and are also keen to learn more about the GST mechanism for online gaming. A clear, fair tax rate will boost investor confidence and create a conducive business environment. This year marks a turning point for the gaming industry, and we look forward to collaborating with the government and other industry players to contribute to its growth and success,” concluded Sureka.

Chief Finance Officer of Baazi Games, Gaurav Kapoor also expressed his opinion, saying, “We welcome the Amrit Kaal Union Budget 2023 with an optimistic perspective. The new income tax regime will result in stimulating local demand and consumption in the economy. The rise of India’s position from an importer to an exporter of mobile phones in India augurs well for the online gaming sector. Moreover, the announcement of setting up 100 labs for developing 5G services apps for smart classrooms, healthcare, and others will open up a new range of opportunities and potential employment.”

“Simplifying the KYC system process will further help in realizing ‘Digital India’ and will enable a seamless experience for consumers. Lastly, the ‘Make in India’ vision will further get a boost with a focus on “Make AI in India and Make AI work for India”, online gaming companies can develop new AI-based advancements that can provide a first-of-its-kind experience to users,” he added.

Eminent Technology and Gaming Lawyer, Jay Sayta, said, “The budget and Finance Bill, 2023 has provided important clarity on applicability of TDS for winnings on online gaming platforms that the industry was seeking. It is a welcome step that the concept of ‘net winnings’ has been recognized in the Income Tax Act for online games and TDS only has to be deducted at the end of the financial year or at the time of withdrawal from the user account.”

“However, the manner in which net winnings are supposed to be calculated and the set-offs that may be permitted before calculating such net winnings are left to be clarified by the CBDT through rules/guidelines. Hopefully, the CBDT will soon provide guidance on the manner in which net winnings have to be calculated,” he added.

Ankur Singh, CEO and Founder of Witzeal Technologies, said, “We are thrilled with the announcement of the first budget of Amrit Kaal that envisions an empowered and inclusive economy driven on the fundamentals of technology and knowledge. India is now the third-largest ecosystem for start-ups globally and ranks second in innovation quality for middle-income countries. Fostering the development of start-ups in the online gaming industry, the initiative of ‘Make AI in India, make AI work in India’ will potentially boost the growth of gaming studios.”

“The Hon’ble Finance Minister particularly mentioned clarifying the taxability relating to
online gaming. Now as the Indian gaming market is expected to grow at a 27% CAGR
reaching 8.6 billion dollars by 2027, government support will further help to streamline the
industry and provide structured growth to this burgeoning industry,” Ankur added.

CEO of All India Gaming Federation, Roland Landers, said, “The online gaming industry welcomes the budget announcement by the Hon’ble Finance Minister, particularly in relation to the rationalization of direct taxation for online gaming. We are happy to note that the Finance Bill carves out the distinction between betting and gambling activities and online games, through introducing a new section 194BA, which taxes a user’s net winnings from online games at the end of the financial year. While we await CBDT’s clarifications and guidelines in this regard, we are hopeful that the certainty in taxation offered by the budget announcement will be a huge stimulus for the growth of the online gaming industry.”