Winnings from online games to be taxed at flat 30% on par with cryptos, proposes Budget 2023
The winnings from online games are proposed to be taxed at flat 30% as opposed to income tax slab rates as applicable to an individual. As per the current income tax laws, these winnings are taxed at the income tax slabs applicable to their incomes.As per the Budget 2023 memorandum, “(viii) to amend section 115BB of the Act to exclude income from winnings from online games from the purview of the said section from the assessment year 2024-25, since it is proposed to introduce section 115BBJ to tax winnings from online games from that assessment year;
(ix) to insert a new section 115BBJ in the Act with regard to tax on winnings from online games to provide that where the total income of an assessee includes any income by way of winnings from any online game, the income-tax payable shall be the aggregate of—
• The amount of income-tax calculated on net winnings from such online games during the previous year, computed in the prescribed manner, at the rate of thirty percent; and
• The amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the net winnings referred to above;”
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Overseas tour packages could get costlier for t...123456789101112The new laws will come into force from April 1, 2023, once they are passed by the parliament. The Budget memorandum further states that the government will prescribe the method on how winnings from online games will be calculated for income tax purposes.
Note that earnings from online gaming must be reported in an income tax return and tax must be paid on them whether or not TDS is deducted. The winnings from online mobile games are taxed under the head ‘Income from other sources’.
Income is taxed under the heading at the rate determined by tax payer’s income bracket.For instance, if a person chooses the old income tax system and has a net taxable income of Rs. 8 lakh, a 20% tax rate would be in effect.
But if they choose the new income tax system, their net taxable income of Rs. 8 lakh will be subject to a 15% tax rate.
Do note that under the previous income tax system, one could claim exemptions and deductions. In the new income tax structure, the same is prohibited.
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This story originally appeared on: India Times - Author:Faqs of Insurances
