1. INTRODUCTION
The Online gaming industry has witnessed an unprecedented growth
in the last few years, with India emerging as one of the largest
markets for online gaming. The Indian Government has recognized the
potential of online gaming sector and consequently the need for
introducing a specific tax regime under the Income-tax Act, 1961
("IT Act").
The Finance Act, 2023 has inserted two new provisions i.e.,
section 115BBJ (tax on winnings from online games) and section
194BA (withholding tax on net winnings) in the IT Act to provide
for a specific tax regime and the withholding tax obligation on any
income by way of winnings from any online game.
As per section 115BBJ, tax is payable at the rate of 30% on the
amount of net winnings, to be computed in the prescribed manner,
from such online games. Further, as per section 194BA, any person
responsible for paying any person any income, by way of winnings
from any online game during the financial year
("FY")
