New Delhi: If you are amongst the people who have generated some income from playing online games in the previous financial year, then you will have to pay taxes and file an updated ITR (i.e., ITR-U) for the same. The Central Board of Direct Taxes (CBDT) is asking such winners to file the updated return and pay taxes on the online winnings accordingly.
ITR-U could be utilised by those categories of taxpayers who have income from online games, lotteries and betting etc. "This is a provision for them to come forward and pay taxes rather than face the consequences of penalty or any other legal action under the income tax law," the CBDT chairman Nitin Gupta said in an interview with PTI as reported by the Economic Times.
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.
Note: Additional tax is payable at 25 per cent to 50 per cent on the additional income.
Meanwhile, PTI reported that the income tax department has collected around Rs 28 crore in taxes after about 1 lakh returns were filed by taxpayers under the newly introduced return filing form called ITR-U.