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TAX ON WINNING FROM ONLINE GAMES*
CIT G.R. Karthikeyan
7A.2-4 Position before Finance Act, 2023
a See Para 7A.2-4a
b
c
d See Para 7A.2-4b
e See Para 7A.2-4c Para 7A.2-4d
a b d
CIT Dy. Director of Small Savings
CIT Jhaveri Industries
c e a Explanation (ii) ix ejusdem generis, Bangalore Turf Club Ltd. UOI
24 ix read with ib 24 ix ib 24 ix
7A.2-4a Meaning of lottery - Explanation (i)24 ix
Explanation i 24 ix chance for a prize, a scheme for distribution of a prize by a lot or chance, the number and
S. 194B 196
value of which is determined by the operator of the lottery
a scheme by which one or more prizes are distributed by chance among persons, who have paid or promised a consideration for a chance to win them, usually as determined by the members on tickets as drawn from a lottery wheelampanna
Kuries (P.) Ltd. Income-tax Officer
Explanation i ix -
7A.2-4b Meaning of card game and other game of any sort - Explanation
(ii) 24 ix
ITO Malayala Panorama Co. Ltd.
Rajmohan V.V., Kumbalappalli ITO
Bangalore Turf Club Ltd. Union of India
ejusdem generis
7A.2-4c Meaning of gamblingplaying a game of chance for money or risky action undertaken with the hope of success the act of risking something of value for a chance to win a prize
gambling, in a nutshell, is a payment of a price for a chance to win a prize. Games may be of chance, or of skill or of skill and chance combined. A game of chance is determined entirely or in part by lot or mere luck. A game of skill, on the other hand - although the element of chance necessarily cannot be entirely eliminated - is one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player
7A.2-4d Meaning of bettingaction of gambling money on the outcome of a race, game, or other unpredictable event
7A.2-5 Game of Skill v. Game of Chance
Black’s Law Dictionary, Fourth Edition 2020. R. J. Williams Furniture Co.
Dr. K.R. Lakshmanan State of Tamil Nadu
http://lawcommissionofindia.nic.in/ reports/Report276.pdf.
7A.3 Tax on winnings from online games [Section 115BBJ]
Notwithstanding anything contained in any other provisions of this Act, where the total income of an assessee includes any income by way of winnings from any online game, the income-tax payable shall be the aggregate of—
i the amount of income-tax calculated on net winnings from such online games during the previous year, computed in the manner as may be prescribed, at the rate of thirty per cent.; and
ii the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the net winnings referred to in clause i
Explanation.—For the purposes of this section,––
i “computer resource” shall have the same meaning as assigned to it in clause (e) of the Explanation to section 144B;
ii “internet” means the combination of computer facilities and electromagnetic transmission media, and related equipment and software, comprising the interconnected worldwide network of computer networks
Gurdeep
vide Gurdeep Singh Sachar UoI
that transmits information based on a protocol for controlling such transmission;
iii “online game” means a game that is offered on the internet and is accessible by a user through a computer resource including any telecommunication device.’.”
a non obstante see Para 7A.3-1
b
c see Para 7A.3-2
d see Para 7A.3-3
e see Para 7A.3-3
f see Para 7A.3-4
g see Para 7A.3-5
h see Para 7A.3-6
i Para 7A.3-8 -
7A.3-1
Overriding effect of the provision
Notwithstanding anything contained in any other provisions of this Act”. non obstante
a b see Para 7A.5
7A.3-2
Winnings from online games
7A.3-2a Meaning of winnings -
“something that someone does to win a race, competition, or prize” “something that is won, especially money”.
Amount won, especially money won in betting -
7A.3-2b Meaning of game - -
“a physical or mental competition conducted according to rules with the participants in direct opposition to each other or activity engaged in for diversion or amusement” “an amusement or pastime”.
Jeffryes Evans Pleasantime Products CCE7A.3-3 Online games should be offered on the internet and accessed through a computer resource including any telecommunication device
Explanation iii
Explanation ii the combination of computer facilities and electromagnetic transmission media, and related equipment and software, comprising the interconnected worldwide network of computer networks that transmits information based on a protocol for controlling such transmission.
Explanation i read with k
