Tax evasion in the gaming industry has come under the radar of the tax department reported The Financial Express.
According to reports, the Central Board of Direct Taxes (CBDT) has urged the winners of online games to file updated income tax returns (ITR-U), disclose their incomes and pay the applicable taxes.
A new provision (ITR-U) in the Income Tax Act, 1961 allows the taxpayers to update their ITRs within two years of filing, on payment of additional taxes, in case of errors or omissions. The taxpayer can file the updated return after the relevant assessment year but within 24 months.
The Income-tax department has collected around Rs 28 crore in taxes after about 1 lakh returns were filed by taxpayers under the newly introduced return filing form called ITR-U, that was notified this year as part of the Budget 2022-23.
Nitin Gupta, chairman of CBDT, on Thursday, stated that one gaming portal has distributed Rs 58,000 crore in the last three years as the gross winning amount, according to the report.
These persons will have the option to pay tax at a marginal rate of 30%, along with interest, without any rebate or deductions, and an additional 25-50% on both the tax and interest, under the ITR-U scheme. If this window is not used, then the individuals could potentially face prosecution along with hefty penalties.
Tax department (direct and indirect) has recently conducted raids on a gaming entities in recent times on allegations of tax evasion and suppression of income.
Meanwhile, an inter-ministerial group tasked with drawing up a framework to regulate online gaming is likely to introduce rules governing the amount of money individual players spend in a game