Budget 2023: Minimum Threshold For TDS On Online Gaming Removed. Here’s How The Industry Is Reacting

Starting April 1, TDS on online gaming winnings will be without the threshold of Rs 10,000.

The Finance Bill has made a “critical distinction” between games of skill and games of chance. ( Image Source :Getty )

Union Budget 2023-24 was presented by Finance Minister Nirmala Sitharaman on Wednesday. As part of proposals relating to rationalism and simplification, the Union Minister announced that the Centre will remove the minimum threshold of Rs 10,000 for TDS and that the Centre will clarify taxability on online gaming. 

What this means is that starting April 1, TDS on online gaming winnings will be without the threshold of Rs 10,000. However, in the case of lottery, crossword puzzles, and similar games, the TDS threshold limit will continue to be Rs 10,000, but will only be applicable to aggregate winnings during a financial year. The TDS will only be applicable on the total winning amount at the time of withdrawal from in-game wallets. 

As per Mobile Premier League (MPL) CFO Vikash Sureka, the Finance Bill has made a “critical distinction” between games of skill and games of chance, separating them into two separate sections. “This signals the Government’s recognition of the unique nature of each and the need for separate tax policies,” said Sureka. 

“With the introduction of two new sections — 194BA (for TDS of winnings from online games for online intermediaries) and 115BBJ (for computation of taxes for those who earn income from winnings of online games) — the government has cleared ambiguities regarding TDS calculation for online gaming and simplifies the process for both companies and users,” Sureka added.

“The announcement of removing the minimum threshold of Rs 10,000 for TDS on online gaming and providing clarity on taxability is a big step forward,” said Revenant Esports Founder and CEO Rohit N Jagasia. “However, most esports games don't have any money withdrawing system so these are applicable for the online gaming sectors which are into Real Money Gaming.”

“Modifications to the TDS limit will impact the Real Money Gaming industry more than the Esports industry. Since esports games majorly do not have a system of 'money withdrawal', TDS does not impact them,” said Alpha Zegus founder and Director Rohit Agarwal. “As for the RMG industry, the removal of the TDS threshold is a bit debatable. Most forms of income in India are considered under the Rs.10,000 TDS threshold. If we consider 'winnings' as 'income', then the threshold should remain the same.”

“As we are still awaiting clarity on the taxability for Esports, we are hopeful that the decisions will be in favour of the community and impact it positively,” said Lokesh Suji, Director, Esports Federation of India, and Vice President, Asian Esports Federation.