Online Gaming Apps: TDS on online gaming apps..implemented from April 1..! Pipa News

Online Gaming Apps: TDS on online gaming apps..implemented from April 1..!

TDS On Online Gaming Apps: The online gaming sector is growing rapidly in India. Many people earn high income from this business. Gaming companies are increasing profits by taking commission or fees from gamers. In this context, the government had earlier decided to apply tax at source (TDS) on online gaming applications from July 1, 2023. But now that date has been changed and it is ready to collect TDS (Tax deduction at source) on online gaming applications from April 1, 2023.

The latest decision comes at a time when stakeholders of the online gaming industry are requesting the Central Board of Direct Taxes (CBDT) and the PM’s Office (PMO) to reconsider the changes in TDS and GST related to the gaming sector. The decision to collect TDS is not only for the government to increase its tax revenue but also to ensure that online gaming companies and players adhere to tax rules.

On the other hand, on February 23, three industry bodies related to online gaming namely E-Gaming Federation (EGF), All India Gaming Federation (AIGF) and Federation of Indian Fantasy Sports (FIFS) together wrote to the Central Board of Direct Taxes (CBDT) to reconsider the changes in TDS. But the new rule will come into effect from April 1. As a result, industry bodies are worried about the impact of this change on the online gaming industry.

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Earlier, the industry bodies had written to the Prime Minister’s Office (PMO) on February 9. The letter requested that online gaming should not be treated like gambling, horse racing and casinos. Because these gambling-type sectors have to pay 28 percent GST. This is called Sin Tax. The companies requested in the letter that paying GST in this range would be burdensome. Industry insiders are concerned that higher tax rates will negatively affect the growth of the online gaming industry.

Currently, online gaming companies must collect 30% TDS on withdrawals of gaming winnings exceeding Rs.10,000 per transaction. From April 1, this threshold will remain the same but instead of per transaction, it will apply to the user’s annual earnings. This means that TDS will be levied only on annual income of gamers above Rs.10,000. Then TDS will have to be paid only once. Currently online gaming companies have to pay 18% GST on their gross revenue.

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Tags: GST, Online games, Tds


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