Is money earned through online gaming taxable under Income Tax rules?
&imwidth=600&imheight=450&format=webp&quality=medium "Is money earned through online gaming taxable under Income Tax rules?")
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The Income Tax rules say such money should be taxed. Taxpayers must declared such earnings under the head Income From Other Sources. Here's what the Income Tax rules say about earning money through online money games.
Do you know that if you have earned an income through online money games, you are liable to pay incometax? Here's an eye-openerfor you. Under the law, any monetary gains are considered income and must be declared. Under Rule 12BA of the Income Tax Law, TDS needs to be deducted on every rupee you earn.
Money earned through online games is taxable at a flat rate of 30 per cent. If a person's net taxable income is less than Rs 2.5 lakh, the reporting of such income is mandatory.
Section 115BBJ of the Income-tax Act, 1961, mandates that such gains be taxed at 30 per cent with all surcharges and cesses. No basic exemption limit or rebates apply to such gains.
All such transactions can be disclosed. However, only positivenet winningsare taxed. These gamingplatformsare obligated to deduct tax at source (TDS) on withdrawals.
Declaring them is mandatory even if the overall income is below Rs 2.5 lakh.
Chartered Accountant Mohit Gupta, Partner – PNAM & Co LLP, told ET that even if the income is just Rs 10 from online money gaming, the income must be disclosed while filing the income tax return.
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"Yes, in this situation, an ITR will be required. Unlike regular income, winnings from online gaming are governed by a special regime under Section 115BBJ of the Income-tax Act. Such winnings are taxed at a flat rate of 30%, plus applicable surcharge and health & education cess, without reference to the basic exemption limit or income slabs," he said.
Even if the winnings are nominal, they are taxable. The reporting of these income tax earnings should be done under "Income from Other Sources".
The disclosure of these incomes, even if nominal, must be done from a compliance perspective.
The central government, meanwhile, has barred online money gaming. It passed a bill in the Parliament, which has become a law. The violators can be punished with a jail sentence of three years and fines up to Rs 1 crore or both.