Budget 2019: Real money point! Clarity on income tax deductions for gamers

The world of gaming is not just limited to users having fun. Significantly, some apps even allow users to earn money. This is a rising trend as more and more people jump on this thrilling bandwagon. However, not many are aware about it, but income gained from games or lotteries are subject to income tax rates and tax deducted at source (TDS). With the Budget 2019 just a few hours away, gaming startups are hoping for relief in regards to incomes arising from games. Apart from this, these startups are also seeking relaxation in GST and TDS filings. The Budget 2019-20 will be presented by Finance Minister Nirmala Sitharaman tomorrow.

Talking about Budget 2019 expectation, Prithvi Singh - Founder and CTO Gameskraft  said, "As an online gaming startup, we expect quite a few things from the Union Budget 2019. Given the fact that startups play a pivotal role in the growth of India’s economy, we are hoping for some much-needed relief from GST and TDS filings. We also hope the extension of the SEZ program or the launch of something similar that will solve the financial woes of early-stage startups."

"Many start-ups don’t offer basic employee benefits like health insurance, and this should be addressed immediately. Apart from that, the government should consider allocating more funds towards the development of office spaces for up-and-coming companies. When it comes to the online gaming sector, I believe the government should bring in some clarity around TDS deductions for real money games," said Singh. 

According to section 194B of Income Tax Act, a 30% TDS is carried on prize money which are won from games, lotteries and others. However, the 30% rate is deducted in excess of Rs 10,000. Additionally, 3% education cess is also levied on such income. 

Just like every other TDS deduction, a taxpayer who has inked gains from playing a game, can also file income tax return (ITR). He or she must include such income under the 'income from other sources' category, and shall submit the TDS certificate as proof for payment of the tax due against the prize money. 

Further, Singh says, "we are expecting some new initiatives aimed at promoting the usage of digital wallets in India. Another demand from the government is to make long-term investments into mobile data infrastructure so more users from tier II and tier III cities come onboard."