Central Board of Direct Taxes (CBDT) on 22nd May, 2023 issued circular regarding guidelines for the new section inserted in the Income-tax Act, 1961 which is the tax to be deducted from any person paying any income by way of winnings from any online games at the time of withdrawal as well as at the end of financial year.
The guidelines issued by CBDT are:-
- Regarding computation of net winnings with respect to multiple wallets of one user.
- Regarding deposit of borrowed money to be considered as taxable or non-taxable deposit
- Regarding treatment of bonus, referral bonus, incentives etc.
- Regarding consideration of amount withdrawn
- Regarding tax under the section for every insignificant withdrawal
- Regarding tax deduction when net winnings is in kind
- Regarding valuation of net winnings in kind
- Regarding any relaxation on penal consequences in the intervening period between 1.04.2023 and the date guidelines issued