Rs 2.61 crore in online games, Rs 28 lakh loss; but taxman seeks tax on Rs 2.33 cr
The Income Tax Appellate Tribunal in Bangalore ruled that taxes on online gaming should be calculated based on net winnings rather than gross credits. This decision followed a case where a player suffered a net loss despite having significant gross winnings credited to his account.
Why it matters
This ruling provides a significant legal precedent for the taxation of the rapidly growing online gaming sector in India.
You play online games - you win some money and you lose some money. How does the taxation on your wins and losses work? The Income Tax Appellate Tribunal (ITAT) Bangalore has recently ruled that tax on online real-money gaming should be calculated on net winnings rather than on the gross amount credited as winnings.The ruling came in the case of Channappa, a resident of Doddakallasandra, Bengaluru, who put more than Rs 2 crore into online rummy and poker but ultimately suffered a net loss of Rs 28 lakh.Channappa had filed his income tax return (ITR) declaring a total income of Rs 4.32 lakh. This included rental income from a house, business income and income from other sources.
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