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MoS MeitY Rajeev Chandrasekhar announces notifi cation of online gaming rules
The Minister of State for the Ministry of Electronics and Information Technology (MeitY), Rajeev Chandrasekhar, addressed a press conference today announced the notifi cation of long-awaited rules for online games. Broadly speaking, the rules are designed in order to safeguard players and regulate the industry. As per the new rules, if the game involves
betting and wagering regardless of how the game is played or the content of it, the game will be in violation of the rules. The minister said there will be multiple SROs
that will deal with the real money gaming aspect, KYC norms for gaming companies and money laundering issues. He added that the online gaming economy is considered as one of the most important parts of the trillion-dollar economy roadmap. According to him the rules have been created
to simplify the confusing legal framework for new startups that are emerging rapidly throughout the country. The rules strive to make a consistent and easy-to-understand framework. Addressing the issues relating to censorship,
the minister said that due diligence under Rule 3 states that the intermediaries have to take down the content reported by the aggrieved party if they wish to continue operating and enjoy safe harbor under Sec 79. Under the new rules, any online gaming intermediary offering real money games is to
display a verifi cation mark acquired through SROs. Further, along with informing its users about the rules and regulations and privacy policy, the intermediary is also required to state the refund and withdrawal policies, follow proper KYC norms and implement proper measures for protection of deposit. By publishing a notice in the Offi cial Gazette,
the Ministry may name as many SROs for online gaming as it would deem necessary for the purpose of confi rming whether an online real-money game is permitted under the regulations. Upon receiving a request regarding an online
real money game, the SRO may determine if the game is permissible. The game should also not have any betting or wagering aspect to it. A list of all the games that are legal and
allowed by the SROs will also be listed on their websites or mobile-based applications or both. This list is required to be properly updated.
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www.g2g.news 24 MAY 2023
Govt: New TDS requirements for online games to
enable ease of doing biz
The central government informed the Lok Sabha that new income tax requirements for online games which came into force on April 1 offered certainty in taxation for online games which will enable ease of doing business and will help the industry in its growth. The Minister for State in Ministry of Finance
Pankaj Chaudhary was responding to queries raised by seven members on the implications of new tax requirements by seven members when he made the statement on behalf of the government. Prior to the 2023 budget amendments, online
gaming companies are required to deduct TDS on taxing winnings above the threshold of Rs 10,000 on a per game basis. Sections 194BA and 115BBJ of the Income Tax Act, 1961 removed the threshold and prescribed a rate of 30% to be levied on the net winnings. Under the new requirements, if a player decides
not to withdraw the winnings from the wallet, then the gaming company will have to TDS only for the amount withdrawn. While not withdrawn amount will attract a TDS at the end of the fi nancial year. While the industry welcomed the much-needed
clarity on direct tax front, the indirect tax aspect i.e., GST still continues to be a contentious issue with no clarity for now. The GST Council is expected to meet in June 2023 and may discuss the issue at length. At present, online skill games are subject to GST
at 18% of gross gaming revenue (i.e., platform fee charged by operators) while betting and gambling is taxed at 28% on full amounts. Reports indicate that the Group of Ministers headed by Meghalaya Chief Minister was inclined in favour of 28% GST on full value but couldn’t arrive at consensus. A higher rate of GST for skill games on par with
gambling and betting according to industry may impede the growth of the online skill gaming sector.
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