Tax dept unearths Rs 58,000 cr in winnings of players on Indian gaming app

Winners have to pay about Rs 20,000 crore in tax

Amid increased scrutiny of fantasy gaming and online gaming apps, the Central Board of Direct Taxes (CBDT) has unearthed that participants in the activities of an Indian gaming company have won Rs 58,000 crore over the past three years.

At 30 per cent tax plus penalties, the winners have to pay about Rs 20,000 crore, CBDT Chairman Nitin Gupta told Business Standard.

“We have started the process of asking the winners to come forward and pay the tax through their updated income tax return filings. If they don’t do so voluntarily, requisite action will be taken,” Gupta said.

Though Gupta declined to name the company, he said the tax department had the data on the participants and winners.

“Whatsoever data we have, we will proceed. It is a humungous amount of data and we are going through it. Some of the winners may have earned more and some less. We have the required information,” Gupta said.

These winnings are for financial years 2019-20, 2020-21 and 2021-22.

Taxing times

• Winnings under scanner are for FY20, FY21 and FY22
• Winners can pay tax during their updated IT returns
• Winnings from lotteries, gambling and games attract 30 per cent tax, without any basic exemption limit
• There is growing clamour to bring in tighter regulations on gaming and betting apps

The tax on winnings from lotteries; crossword puzzles; races, including horse races; card games; and other games of any sort, gambling or betting is a flat 30 per cent without any basic exemption limit. In such a case, the payer of the prize money will generally deduct tax at source (i.e. TDS) from the winnings and pay the participant the balance. The parts of the Income Tax Act that govern winnings from gaming, betting, lottery, etc are Sections 155BB and 194B, the latter for TDS.

“No balancing of expenses is allowed. If you have lost the game, you cannot adjust your winnings against that. Each win, just like lottery, is taxed,” Gupta said.

He said investigation into the gaming company was part of a larger scrutiny of online betting and gaming apps and sites, which have mushroomed over the past half a decade.

“In terms of evasion, we have noticed that a lot of income is being earned and has been earned in the recent past from online games and similar activities, which may be online betting or online games or whatever name they can be categorised into.”

Investigation by the CBDT comes even as there is a clamour to bring in tighter regulations for gaming and betting apps.

Meanwhile, the next meeting of the Goods and Services Tax (GST) Council, later this month, is likely to decide on the base on which 28 per cent GST will be levied on casinos and online gaming and betting.