TDS on winnings from online games preponed [Sec 194BA of ITA'61 - Sec 393 of ITA'25]

The Finance Bill 2023 (Lok Sabha) has revised the effective date from which TDS on winnings from online games will be deducted. The amendment was made at the time of passing of Finance Bill, 2023 from Lok Sabha today. Earlier, the effective date on TDS on all winnings from online games was proposed to be July 1, 2023. Now it is 1st April 2023. Further, from April 1, 2023, TDS on winnings from online games will be deducted for every rupee earned, net of entry fees (if any). The rate at which TDS on winnings from online games is deducted at 30 per cent.

The proposed Section 115BBJ provides that the net winnings from online games shall be taxable at the rate of 30%. Further, any person responsible for paying the winnings from online games shall deduct tax at source at the rate of 30% under the proposed Section 194BA. The provisions for tax deduction at source under Section 194BA were proposed to be effective from 01-07-2023.

The Finance Bill (Lok Sabha) changes the date of applicability of Section 194BA to 01-04-2023 instead of 01-07-2023. The consequential amendments have also been made to Section 194B w.e.f. 01-04-2023. However, the consequential amendments to Section 271C and Section 276B are still applicable from 01-07-2023, which are also expected to be aligned going forward.

Further, Section 206AB provides that where a person fails to furnish his return of income for the specified period and tax deducted/collected during that period exceeds the specified limit, the deductor shall deduct the tax at a higher rate. This provision does not apply where the tax is required to be deducted under the specified provisions.

The Finance Bill (Lok Sabha) adds Section 194BA to this list with effect from 01-04-2023. Thus, the tax shall be deducted at the rate of 30% even if the deductee is a non-filer of return.