Do you play online money-earning games often? Have you won any prize money through online gaming in the previous financial year? If yes, then we are asking because CBDT has made it clear that individuals earning money through online gaming will have to file an updated ITR, which is ITR-U, and have to pay taxes on earnings accordingly.
ITR-U, Tax Applicable On Earnings Generated Through Online Gaming
Nitin Gupta, The Chairman, CBDT, while interacting with PTI, said that ITR-U is for the special class of taxpayers who generate income through online gaming, betting, lottery winnings 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, ” he said.
Income Tax Return-Updated or ITR U
ITR-U means Income Tax Return-Updated, introduced by Finance Minister Nirmala Sitharaman in her budget 2022 speech, is filed Under section 139(8A) of the Income-tax Act, 1961. This Updated Return option “was introduced to give taxpayers an easy route to correct mistakes related to estimating their incomes on which tax is payable.”
“ITR-U provides an opportunity to update one’s income tax returns within two years after the end of the relevant assessment year. ITR-U provides an opportunity for taxpayers to include any income they forget to pay tax on while filing their ITR. It is important to note that additional tax is payable at 25% to 50% on the additional income,” mentioned by Economictimes.
Taxpayers, who are filing ITR-U or Updated Returns, will have to provide specific reasons to do so. Reasons can be, “return previously not filed or income not reported correctly, wrong heads of income chosen or reduction of carried forward loss.”
“Prior to ITR-U, once the original ITR was filed, an individual had an option to only file a revised ITR to correct any mistakes made at the time of filing their return. The last date for filing a revised ITR is December 31 of the assessment year. Once this deadline is missed, the individual cannot correct mistakes made while filing ITR.”
According to a PTI report, the Income Tax Department has collected around ₹28 Cr under the newly introduced ITR-U or Updated Return category, after around 1 lakh taxpayers filed returns.