News | Tax

CBDT Asks the Winners of Online Games to Pay Taxes, File Updated ITR

Tax evasion in the gaming industry has come under the radar of the tax department. The Central Board of Direct Taxes (CBDT) has urged the winners of online games to file updated income tax returns (ITR-U), disclose their incomes and pay the applicable taxes.
Nitin Gupta, chairman of CBDT, stated that one gaming portal has distributed Rs58,000 crore in the last three years as the gross winning amount. It has over 8 million users.
The winners will have to pay 30% tax along with interest without any rebates. They will also have to pay an additional 25-30% on both the tax and the interest due.
The winners might be subjected to hefty penalties if they fail to pay tax dues by the deadline. The last date to file the ITR-U is generally after 24 months after the end of the relevant assessment year. For FY22, the last date to file the ITR-U stands on 31 March 2024.
"ITR-U should be utilised by the winners of such games from other gaming portals also, as it would be an efficient provision for them to come forward and pay taxes rather than face the consequences of penalty," Gupta said.
On 15th February, the CBDT had raided a business group engaged in gaming. They searched and seized operations of the group in 29 locations spread over Mumbai, Delhi, Jaipur, Pune, Kolkata and Surat.
According to Gupta, 100,000 ITR-Us have been filed since the scheme was introduced in Budget 2022. The additional taxes paid have been to the tune of Rs28 crore. It is beneficial for the people who may have unknowingly or knowingly not paid taxes on dues from activities like gaming, betting, lottery etc.
Short for income tax return – updated, ITR-U was announced by finance minister Nirmala Sitharaman in her Budget 2022 speech. It is filed under section 139(8A) of the Income-tax Act, 1961. The update return option was brought in to make it easier for taxpayers to correct mistakes related to estimating their incomes on which tax is payable.
It must be noted that individuals who will be filing ITR-U will have to state reasons for updating the income. These may include - return previously not filed or income not reported correctly, wrong heads of income chosen or reduction of carried forward loss.
In the form ITR-U, the assessee needs to disclose only the amount of additional income, under the prescribed income heads, on which additional tax is required to be paid. No detailed income break-up needs to be disclosed. 
The period for filing of ITR-U is within two years after the end of the relevant assessment year. So, in the current financial year 2022-23, a person can file an updated return for AY 2020-21 and AY 2021-22. ITR-U provides an opportunity for taxpayers to include any income they forget to pay tax on while filing their ITR. 



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Changes in Our Business Model
25th Sept 2020
Greetings from Moneylife Advisory Services
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
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