The Income Tax Department has urged ‘winners’ of ₹58,000 crore during the last three years on an online gaming platform to come forward and file updated or revised return and pay the required taxes. A Group of Ministers (GoM) is meeting on Monday to finalise its recommendations for GST on online gaming, casinos and horseracing.

Talking to BusinessLine, Chairman of Central Board of Direct Taxes (CBDT) Nitin Gupta said that the Income Tax Department found data about winning an amount of about ₹58,000 crore related with three fiscal years (2019-20, 2020-21 and 2021-22.) However, he refused to name the company, citing the confidentiality clause of the Income Tax Act, but said it is an Indian company and the onus is on the winners to pay taxes.

‘Winner’ tax

“Requesting the winners to come forward and file the updated return pay the tax. Whatever data we have, we will proceed forward. Taxpayer should come forward voluntarily and it is the best thing. Some may have earned more and some less, some might have earned in millions and some in small amounts,” he said, adding that the Department requires information about the winners. No filing could result in action from the Department.

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The new updated return scheme, introduced this fiscal, allows an assessee to file a return for any earning which they could not include in original return. It will be permitted for the last two assessment years but with an additional tax payment of 25-50 per cent of tax dues. The ‘winner’ can file the updated return for Assessment Years 2020-21 and 2021-22 (Fiscal Years 2019-20 and 2020-21) till March 31, 2023 and March 31, 2024 respectively. Similarly, revised return for Assessment Year 2022-23 (Fiscal Year 2021-22) can be filed till December 31, 2022 without any additional payout.

At present, the iincome tax rate on online gaming is 30 per cent. “No expenses are allowed. If you have lost the game, nothing is allowed. Each win is taxed. It is like lottery. Loss cannot be adjusted against the win,” Gupta clarified. This means total tax due in case of the said company to the tune of ₹20,000 crore.

GoM meet

Meanwhile, a Group of Ministers headed by Meghalaya Chief Minister Conard Sangma is expected to finalise its recommendation for GST on online gaming, casinos and horse racing.  Once the report is finalized, it will be placed before the GST Council meeting, likely to take place later this month. The Council, in its last meeting held in June, had asked the GoM to fine tune its recommendation.

It is believed that the GoM is in favour of a uniform 28 per cent GST rate on horse racing, online gaming and casinos. The key issue is the value at which tax to be levied and the panel will finalise its recommendation for that. Online gaming now has a dual rate of taxation — 18 per cent on games of skill (not involving betting or gambling) and 28 per cent on games of chance (involving betting and gambling). Most online gaming apps pay GST at the rate of 18 per cent. Both casinos and horse-racing attract GST of 28 per cent.

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