Budget 2023: Online gaming sector is one of the fastest growing sectors in India. With the advent of 5G technology in the year 2023, the expansion of Next Gen gaming tech will accelerate further.
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Online gaming sector is one of the fastest growing sectors in India. With the advent of 5G technology in the year 2023, the expansion of Next Gen gaming tech will accelerate further. With 15 billion downloads in 2022, India has the largest consumer base for mobile games in the world. According to the Lumikai report, the industry has generated revenue of $2.6 billion in FY 2021-22 and it may cross $8.6 billion by FY 2026-27.
Budget In 2022, the Animation, Visual Effects, Gaming and Comic (AVGC) Promotion Task Force was announced. Now on February 1, Finance Minister Nirmala Sitharaman is going to present the budget for the financial year 2023-24.
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In such a situation, what announcements can be made for the online gaming sector. Let’s take a look.
Taxation for the online gaming sector
Progressive taxation based on best international practice, as recommended by the AVGC report, should be adopted. For this better income tax rules should be implemented. Britain and France have made good changes to attract online gaming operators. Earlier online gaming operators had moved to other places due to the old income tax system in these countries. Changes in tax rules have helped the UK economy attract gaming operators.
Increase in tax deduction (TDS) limit on prize money
Central Board of Direct Taxes (CBDT) Chairman Nitin Gupta said that Budget 2023 will bring some changes in TDS provision for online gaming, so that tax evasion can be controlled. There are two main parts of the tax provision under the Income Tax Act, 1961 for the online gaming sector.
Firstly, the reward from online games will be considered as income of the players and according to the existing income tax rules on them, the players will be considered as income from other sources. Secondly, the online gaming company has to deduct tax at the rate of 30 per cent on the prize, which crosses the limit of 10,000 per game. It is now being considered to increase the TDS limit for the sector .