Government Rolls Out Atma Nirbhar Bharat Abhiyan: How Does it Impact the Poker Community?

This past Tuesday brought with it a ray of hope for the Indian poker community as the Finance Minister’s announcement of Atma Nirbhar Bharat Abhiyan promised a 25% reprieve in TDS deductions under various heads to infuse liquidity in the system.

It is no news to anyone in the poker circuit that TDS has been the bane of the industry. When the 25% TDS reprieve was announced by the government, it was cause for much celebration, in such trying times. Sadly, the latest press release by the government has not included 194B, which contains provisions relating to the deduction of TDS on winnings from lotteries and real money skill games like poker.

Before we get into the details, let’s do a quick recap of what has been going on.

The novel Coronavirus (COVID-19) pandemic has continued to spread far and wide with the global tally now standing at 4,446,032 as of May 14. According to the latest stats, 298,442 people have lost their lives to the virus. India is the 12th most-affected country at present, with 78,810 confirmed cases and 2,564 deaths. The 21-day lockdown that was implemented by the central government on March 25, is still ongoing.

A direct result of this has been on the economy, with lakhs of people, especially daily wage earners suffering the most. With an economic stimulus becoming an immediate necessity, Prime Minister Narendra Modi, on May 12, announced the ‘Atma Nirbhar Bharat Abhiyan’ or ‘Self-reliant India Mission.’ This mission comes with a relief package wherein Modi has pledged to spend a total of ₹20 Lakh Crores to weather the economic fallout of the global pandemic.

On May 13, Finance Minister Nirmala Sitharaman made a key tax concession as part of the COVID-19 package to revive the economy. Of the six reforms that the minister spoke about, 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.

So, the essential things to know about this new package is:

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.

A press release dated May 13, issued by the Central Board of Direct Taxes, Department of Revenue – Ministry of Finance, outlined the sections of the Income Tax Act that will fall under the Atma Nirbhar Bharat Abhiyan. Out of the 23 sections that have been included, the section pertaining to poker winnings, i.e., section 194B was not one of them.

While poker winnings may not be eligible for the reduced TDS, there is another point in the recently released package that does have a bearing on poker players at least those playing on PokerBaazi.

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 are now 3.75% chargeable.”

The reduced TDS rates are applicable from May 14, 2020, to March 31, 2021.