I-T dept's idea of gross winnings can kill online gaming
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The Department of Income Tax is taking a look at the online gaming industry. It is trying to assess possible tax evasion. One online platform had earned over ₹58,000 crore in the last three years. The platform is said to be an online rummy portal with around 8 million users. Other platforms like Dream11, which sponsored IPL and hosts fantasy cricket games, are also said be under examination.
Dream11 is a market leader in fantasy sports. The Mobile Premium League has unicorn status. There are popular massively multiplayer online role-playing games (MMORGs) like World of Warcraft, Final Fantasy and PuBG. A large ecosystem has developed in India with platforms, coders, game developers and graphic designers. All platforms are digital. KYC is applicable either on sign up or when somebody withdraws money from the wallet. The Income Tax Act applies to winnings from gaming, betting, lottery, etc. and the tax on winings from lotteries, crossword puzzles, races, card games, gambling or betting is flat 30%.
The IT department has access to all data on all platforms. It is hard to believe that the platforms would have knowingly attempted to help players evade tax. The platforms don't gain from enabling tax evasion, they pay taxes anyway on the fees they charge. If the I-T department interprets “gross winnings” without considering the business model, it could potentially lead to a shutdown of this entire ecosystem.
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