New Delhi: Finance Minister Nirmala Sitharaman in the Finance Bill 2023 has proposed new rules under the Income Tax Act to define online gaming and levy a tax of 30% on net winnings from online games. The proposal was made in Section 115BBJ, which was added to the Finance Bill and will come into effect from 1 April 2024.
“For the purposes of this section, online games shall have the meaning assigned to it in clause (iii) of the Explanation to section 115BBJ,” according to the Finance Bill 2023.
The Finance Bill also added another section called Section 194BA, which gives the Securities and Exchange Board of India (SEBI) the power to create a process for the computation of deduction of income tax at the time of withdrawal of net winnings from online games. It will come into effect from 1 July.
Sitharaman in her budget speech also proposed to do away with the minimum threshold of ₹10,000 for levying TDS on winnings from online gaming. This means TDS will be charged even if the winning is under ₹10,000. Before the budget announcement, some sections of the gaming industry had urged the government to not remove the threshold.
