The report highlighted the pressing issue regarding the implementation mechanism proposed in the Union Budget for TDS (tax collected at source) for online gaming.
Regulation of online gaming not only opens up economic opportunities but also solves various social problems, the report said.
The online gaming sector is a fast-growing industry with the potential to significantly contribute to the country’s goal of becoming a $1 trillion digital economy, creating significant jobs and spurring innovation, the report said.
Regulation of online gaming will not only open up economic opportunities but also address various social issues, says a report by Primus Partners titled Online Gaming in India: The Taxation Challenge.
The announcements in the Union Budget 2023-24 are positive for the sector as it has addressed the ongoing request to include cost recovery in the calculation of online gaming revenues under income tax, he said.
The report highlighted the pressing issue regarding the implementation mechanism proposed in the Union Budget for TDS (tax collected at source) for online gaming.
“The issue arose due to the amendment of section 194B, which currently covers online gaming from April 1, 2023, and a separate provision related to online gaming, i.e. section 194BA, which will come into force from July 1, 2023, which has led to the anomaly,” it said. .
It would be ideal to streamline the application of the amendments to “online gaming” and set a special effective date of April 1, 2023, he said, adding that alternatively, the current tax regime could be extended to April 1, 2023. Resolve any discrepancies in interpretation by June 30, 2023.
Recurring events also lead to higher costs for the industry, resulting in a number of small and medium-sized gaming companies finding it difficult to bear unnecessary costs, the report said.
On the GST front, the report said evidence from countries where the sector has developed to demonstrate the GGR (gross gaming revenue) tax model would allow the industry to thrive.
“Leaving GST on gross nominal value would be a departure from established practices besides making the sector viable. The latest changes to TDS on prize pool income from unlimited online games should be reviewed by the GST Council,” the notification said.
Online gaming is a fast-growing industry in India growing at a CAGR of around 27 percent over the next five years, he said, adding that the sector has huge potential and is expected to be important for boosting India’s GDP. A job generator with the potential to add over 1 million jobs by 2030.
“For a sector as dynamic as online gaming, a robust and supportive regulatory framework will ensure a responsible, transparent and safe environment for all,” said Nilaya Varma, CEO, Primus Partners India.
The online gaming sector has huge potential if it is encouraged with the right regulatory support from the government and a growth-friendly tax regime, he added.
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(This story was not edited by News18 staff and was published by a syndicated news outlet)
