The Centre has collected more than INR 700 Cr in Tax Deducted at Source (TDS) from winnings of online gamers and cryptocurrency transactions in the ongoing financial year.

The government has recorded TDS of about INR 600 Cr from online gaming, news agency PTI cited Nitin Gupta, chairperson of Central Board of Direct Taxes (CBDT), as saying.

Furthermore, an additional INR 105 Cr has been raised from TDS on cryptocurrency transactions.

Earlier this year, the Finance Bill 2023 introduced two new Sections – 194BA for TDS on winnings from online games for online intermediaries, and 115BBJ for computation of taxes for those who earn income from winnings of online games.

Under the new rules, 30% TDS is applicable on annual earnings of online gamers.

As per the guidelines, in case of multiple wallets under one user, the user account will include every account of the user registered with an online gaming intermediary where any taxable deposit, non-taxable deposit, or the winning of the user is credited and withdrawal by the user is debited.

Each user account will be considered for calculating net winnings and deposit, withdrawal or balance.

Net winnings of an online gamer would be calculated by subtracting the sum of total deposits during the financial year and opening balance at the start of the year in the user account from the amount withdrawn during the year.

Moreover, the CBDT has put a threshold of INR 100 for deducting tax for winnings from online gaming.

On the other hand, 1% TDS under section 194S of the Income Tax Act is being levied on crypto transactions above INR 10K with effect from July 1, 2022.

For both gaming and crypto TDS, the industry feared a significant impact on the user base due to change in TDS rules. Many crypto startups such as Pillow, Flint Money, and WeTrade shut their operations over the past few months citing regulatory uncertainty and hostile market conditions.