Mock games, real cash, I-T is watching!
PLAYING a mock corporate game where you end up getting a ?real? and hefty cash reward for turning around a sick company while displaying a decent net profit could get very ?taxing? for players in Lucknow from the next fiscal.india Updated: Jan 21, 2006 00:58 IST
PLAYING a mock corporate game where you end up getting a “real” and hefty cash reward for turning around a sick company while displaying a decent net profit could get very “taxing” for players in Lucknow from the next fiscal.
The Income Tax Department is readying itself to scrutinise all mock or real games sponsored by corporates for young executives who participate in-house gaming sessions where they are asked to manage a mock company and compete against others in the market to make a net profit. The winner who generates the highest net profit gets 30 to 40 per cent of the reward in real cash. A practice followed by many corporate as an incentive to keep employees happy had now attracted attention of the taxman.
Highly placed sources in the Income Tax Department here informed that beginning next fiscal, all the mock as well as real games sponsored by any corporate and prizes won by the contestants even during the current fiscal would be scrutinised thoroughly to find out if the annual income tax returns of the sponsors of games have reflected the cash awards and tax had been deducted at source.
Sources said quite a few of the mind games have been sponsored by corporates within their set-ups in the State Capital during the last fiscal.
“Legitimate tax payers have nothing to fear if they are organising any gaming event. It is those entities who try to play smarter than income tax sleuths could get into a trouble”, they warned.
The Income Tax Department would also ask both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) for transaction details a broker has allowed incentive trading within his organization.
“All profit booked by the contestants in a real-life trading situation is liable for short-term capital gains tax payable to the Income Tax Department. As such, brokers cannot allow real-life trading as a game by using money of a person who may not be a legitimate market participant and also may not be holding a Demat account besides the mandatory PAN”, sources said.
Moreover, all profits booked in a real stock market trading situation be it only a game without the contestants being legitimate income tax assesses, sources said.
The Income Tax Department would also ask the contestants about details of the cash prizes if they exceed over a prescribed limit as per the IT laws if the sponsors who organize such games fail to provide satisfactory details on the amount spent by them in organising a contest and awarding large cash prizes, sources added.