The Central Board of Direct Taxes (CBDT) has asked winners of online games to update their income tax returns to file taxes on winnings of online games. It was noted that hardly any winners had paid taxes on their winnings in FY20-FY22.
The CBDT has urged winners to update their income tax returns (ITR) under the updated income tax returns (ITR-U) scheme. Winners will have to pay 30 percent tax on the winnings without any rebates, along with interest due on the tax as well as the penalties associated with the ITR-U scheme in order to comply with their tax liabilities.
Nitin Gupta, Chairman of CBDT stated that one gaming portal has distributed Rs 58,000 crore in the last three years as the gross winning amount. “ITR-U should be utilised by the winners of such games from other gaming portals also, as it would be an efficient provision for them to come forward and pay taxes rather than face the consequences of penalty,” Gupta said.
The Finance Act 2022 brought several changes to the Income Tax Act, one of which was the ability to update or revise income tax returns. The ITR-U scheme was brought forth to allow taxpayers to make corrections in the ITRs that they have submitted for the previous two financial years.
Currently, taxpayers can use the scheme to revise their ITRs for the financial years 2019-20 (FY20) and 2020-21 (FY21). Using the scheme allows taxpayers to comply with their tax liabilities without facing any legal action
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