The online gaming industry has been on a phenomenal growth trajectory in recent years. However, with growth comes uncertainty, and the industry is now facing a crossroad due to the new taxation policy announced in the 2022 budget. Effective from July 01, 2023, the policy removes the threshold of Rs 10,000 and imposes a 30% TDS on net winnings, with separate rules for calculating the net winnings. This provision will be applicable from April 01, 2024.

As a result, the online gaming industry will have to change its ways of functioning when it comes to the deduction of TDS for the third time. Between April 01, 2023, to June 30, 2023, gaming companies have been asked to deduct TDS as per Section 194B (amended) of the IT Act. This provision is causing confusion for users, as a TDS of 30% will be levied on winnings that exceed Rs 10,000. This means that a user who wins Rs 5,000 and requests a withdrawal will not be taxed, but if they win an additional Rs 6,000 and decide to withdraw, a TDS of 30% will be levied.

This new policy is creating havoc in the online gaming sector, as platforms incur additional liabilities and users have less money in their accounts. As the industry battles to control the chaos, only time will tell who the winner will be.

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