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Section 115BBJ. 

How do I pay tax on online game? (Tax on online gamming)

 After section 115BBI of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2024, namely:––Tax on winnings from online games.‘115BBJ. (Tax on online gamming)

Notwithstanding anything contained in any other provisions of this Act, 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— (i) the amount of income-tax calculated on net winnings from such online games during the previous
year, computed in the manner as may be prescribed, at the rate of thirty per cent.; and  (ii) 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 in clause

 (i).Explanation.—For the purposes of this section,––  (i) “computer resource” shall have the same meaning
as assigned to it in clause (e) of the Explanation to section 144B;  (ii) “internet” means the combination of computer facilities and electromagnetic transmission media, and related equipment and software, comprising the
interconnected worldwide network of computer networks that transmits information based on a protocol for
controlling such transmission; 

 (iii) “online game” means a game that is offered on the internet and is accessible by a user through a computer
resource including any telecommunication device.’

Explanation:

Online games like Cricket, Poker, Rummy, Ludo is  more popular in India in past 20 years. Government wants to organize the tax structure for such online gaming income individuals. Some of the professional gamer earn major part of their income from online gaming. All online gaming income is taxable @ 30%.  

Steps you needs to follow to calculate Income tax on such online  gaming income which is part of your total income is as under:

 

Eg. Mr. Rajubhai earned Rs.900000/- as  total income.

   

Step 1: Do Bifurcation of total income.

Step 2: Taxation applicability on both parts

=  Rs. 1,50,000 * 30% { income tax @ 30% is applicable on gaming income}=   Rs. 45,000

= other income * applicable slab rates

( 750000 * applicable slab rates )

If Rs. 7,50,000 is salary income than additional Rs.50,000 deduction is allowed as STD. DEDUCTION.

Step 3: Combined liability with Edu. cess.

After calculating both taxes additional education cess on income tax need to be paid as per Income Tax Act. Additional Education cess is 4% of total Income tax liability. 

Step 4: Online TDS deducted or not.

It is general compliance practice in companies to deduct Income Tax on income earned by you from online gamming. If it is deducted than tax payer need to claim refund of such amount if his/her taxable income is not more than Rs. 700000/- ( For FY 2023-24). Government refund the whole amount of TDS deducted by companies at time of payment. If no TDS was deducted at time you received the payment you needs to pay tax @ 30% before filing of your ITR. 

Step 5: File Correct ITR form for Such incomes

This is very important to remember that even if your taxable income is below exemption limit of RS. 250000/-( Old Regime) or Rs. 300000/- ( New Regime) you need to file ITR return if you want to claim your TDS. TDS amount deducted by companies at time of payment to you will be refunded by Income Tax Department only if you file your ITR timely.

  

Step 6: Claim your refund if applicable. 

Successful claim of refund is also a key, so kindly verify your bank accounts with income tax and also select correct bank accounts in ITR to claim refund money.

 

 

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