3 days ago, the Finance Minister, Nirmala Sitharam, gave out news that there will be a 25% exemption on TDS deductions under various industries to facilitate liquidity in the system. This new update is in accordance with the new ‘Atma Nirbhar Bharat Abhiyan’ initiative by the government.
TDS on poker winnings has always been a sad reality for the poker community. When the 25% reprieve was announced, there was a lot of excitement and happiness building up about this poker news. But the recent press release by the government does not include the crucial 194B article, which consists of provisions relating to the deduction of TDS on winnings from lotteries and real money skill games.
With the growing concerns about the total number of positive COVID-19 cases, this initiative is a direct result of the fragile state of the economy. On 12th May, the P.M Narendra Modi, announced the ‘Atma Nirbhar Bharat Abhiyan’ with a 20 lakh crore package to combat the economic fallout that has been caused by this global pandemic.
Finance Minister, Nirmala Sitharaman made a key tax concession as part of the COVID-19 package to revive the economy. Out of the total six reforms about which the minister spoke, one was to cut the Tax Deducted at Source (TDS) rates by 25% for the non-salaried section.
To clarify, the TDS reprieve applies to professionals, gig economy workers, contract employees, and independent service providers. It does not apply to salaried employees on a company’s payroll.
Here are a few important points about the new package:-
1. This change will come into effect immediately, which is from May 14, 2020.
2. The new TDS deduction is likely to benefit contractual employees and non-salaried employees.
3. Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc. will be eligible under this reduced rate of TDS.
4. This reduction will be applicable until March 31, 2021.
The Central Board of Direct Taxes, Department of Revenue – Ministry of Finance, made a press release on 13th May, outlining all the sections of the Income Tax Act that will fall under the Atma Nirbhar Bharat Abhiyan. However, the section pertaining to poker winnings, i.e, Section 194B was not included amongst other 23 sections which were included.
Although poker winnings will not be eligible for reduced TDS, players playing on PokerBaazi will not have to fulfill any of these requirements!
One of the measures announced by the government was, “Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc., shall be eligible for this reduced rate of TDS.”
PokerBaazi deducts TDS under Sections 194H (Commission or brokerage) for making all rakeback or weekly cashback payments. Confirming the same, PokerBaazi representative said,
“Any rakeback or weekly cashback comes under commissions and is now 3.75% chargeable.”
The reduced TDS rates are applicable from May 14, 2020, to March 31, 2021.
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