Online gaming platforms are not allowed to deduct tax at source on withdrawals made by players as long as the withdrawal amounts are less than Rs.100 per month and meet certain criteria, the Central Board of Direct Taxation said ( CBDT) in a set of guidelines issued on Monday.
According to a statement from the Department of Taxes and Customs (CBDT), the guidelines were designed to remove the burden on taxpayers.
Net earnings of less than ₹100 per month will not be taxed at the time you withdraw it, but if you withdraw more than that in the same month or the following month or at the end of the tax year, the tax will be deducted.
Additionally, to qualify for this concession, CBDT clarified in the guidelines that the tax director must pay the difference if the user’s account balance is insufficient to cover the tax liability when the deduction is made.
The concession is proposed as a practical response to the large number of players who play with very small amounts and withdraw very small amounts, which could mean a significant tax deduction at source for the online gaming company.
If an online gambling business pays any income in the form of winnings to any person in the tax year under section 194BA, then the business must deduct income tax from the net amount of the winnings in the user’s account.
If funds in a user account are used to purchase an in-kind item and are delivered to the user, the earnings are treated as net cash earnings and taxes are deducted at source. If the winnings are all in cash or partly in cash and partly in cash, but the cash part is not enough to meet the tax deduction obligation, then the gambling company must ensure that taxes are paid on the winnings. net cash earnings before releasing. .
Also, according to the guidelines, a deposit must be made into a user account from income that has already been taxed or must be tax free. If a user borrows money and deposits it into their user account, the guidelines explain, it is considered a tax-free deposit.
An online gaming broker provides the user with a bonus, referral bonus, incentive, etc. These should be treated as taxable deposits. The taxable deposit increases the balance in the user’s account and cannot be deducted in the calculation of net earnings, as only the non-taxable deposit can be deducted, as explained in the guidelines.
CBDT publication issues tax guidelines for online gaming platforms first appeared on All India Gaming Federation.
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