Union Finance Minister Nirmala Sitharaman presented the full and final budget of 2023 at 11: 00 am on February 1st, 2023. The Finance Minister proposed certain changes to rationalize TDS rates on online gaming and EPF.
There are several proposals relating to rationalisation and simplification. Income of authorities, boards and commissions set up by statutes of the Union or State for housing, development of cities, towns and villages, and regulating, or regulating and developing an activity or matter, is proposed to be exempted from income tax.
For online games, it is proposed to provide for TDS and taxability on net winnings at the time of withdrawal or the end of the financial year. Moreover, TDS would be without the threshold of ` 10,000. For the lottery, crossword puzzles games, etc threshold limit ` of 10,000 for TDS shall continue but shall apply to aggregate winnings during a financial year.
The Finance Ministry reviewed the past year’s income tax norms on online gaming and expanded its scope by removing the minimum threshold of ` 10,000/- for TDS and clarifying thetaxability relating to online gaming through Budget 2023.
As per the 2023 Budget, any person responsible for paying to any person any income by way of winnings from any online game during the financial year shall deduct income tax on the net winnings in his user account, computed in the manner as may be prescribed, at the end of the financial year at the rates in force.
The new provision provided certain conditions that where there is a withdrawal from a user account during the financial year, the income tax shall be deducted at the time of such withdrawal on the net winnings comprised in such withdrawal, as well as on the remaining amount of net winnings in the user account, computed in the manner as may be prescribed, at the end of the financial year.
In case of net winning are wholly in kind and partly in winning, the person responsible for paying must ensure payment of tax of net winning. Clause 54 of the 2023 Budget was to insert a new section 115BBJ in the Income tax Act relating to tax on winnings from online games.
The Budget 2023 rationalise the EPF mechanism by reducing the TDS rate from 30 per cent to 20 per cent on the taxable portion of EPF withdrawal in non-PAN cases. TDS will be deducted by Section 192A of the Income Tax Act of 1961.
When an employee reaches the age of 58, his or her EPF account matures. If an employee is unemployed for 60 days in a row, the amount in his or her EPF account is paid to the employee in full and that amount will be tax-free. However, if the employee withdraws the amount before it matures while he is employed, tax deducted at the source (TDS) will be applicable.
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