For around 20 years, free-to-play (F2P) games have been ruling the field, while play-to-earn (P2E) games are comparatively new, and though there's a clear difference between them, sometimes it may feel that there is not much clarity.

What are these games?

A free-to-play game is one in which you can play for free, whereas a play-to-earn game allows you to own the assets you have in the game.

Monetary benefits

Gamers don't get any monetary benefits in F2P as the benefits are enjoyed only by the makers and the distributors. Such games include Call of Duty, Fortnite, etc. In P2E, gamers can enjoy some benefits for their efforts. Some examples are: Wilderness P2E, Cryptokitties, Axis Infinity and Lost Relics. Casino Days allows people to play poker and more to earn money.

How are P2E games different from F2P games?

In P2E games, people are allowed to earn money by trading and selling in-game. They are created to earn money when the gamers are engrossed in them and often pay some amount for updates. While in F2P, though you can purchase some items, you can't sell them off.

However, traditional gamers aren't keen on P2E games, as they generally play for leisure or with a serious mind.

Won money in online games? Govt wants you to pay tax, update ITR

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Income from online games, lotteries and betting

The Central Board of Direct Taxes (CBDT) says that if you have won money playing online games in the previous financial year, then you must file an updated ITR (i.e., ITR-U) and pay taxes on winnings accordingly. CBDT chairman Nitin Gupta recently said that ITR-U could also 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 said.

What is ITR-U?

Announced by the finance minister Nirmala Sitharaman in her Budget 2022 speech, ITR-U stands for income tax return - updated. It is filed under section 139(8A) of the Income-tax Act, 1961. ITR-U or updated return 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.

State reasons

Taxpayers filing updated return will have to give reasons for updating the income. The reasons may include - 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.

Last date

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. Currently, ITR-U can be filed for the financial years 2019-20 and 2020-21 or assessment years 2020-21 or 2021-22. It was reported by PTI 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.

Confirm ITR to get refund

The income tax department has been sending emails to taxpayers asking them to confirm that the ITR filed by them is correct. These emails have been sent either because taxpayers have claimed higher deductions than what is claimed via the employer or if their gross total income is less than from the previous year.

How Do Games Feature Play-to-Earn Functions?

Play-to-earn games do not refer to gambling games where you must wager real money to increase your chances of winning. You may sell the in-game items, which can be converted into real money.

Frequently Asked Questions (FAQs):

Is there any other way to earn money?
Monetise your streaming events, participate in gaming competitions with cash prizes, or sign up to be a game tester.
The assets may be accumulated by players through gameplay, and they can subsequently be traded or sold to others for digital currencies.

How can I understand P2E?
Explore Axie Infinity to obtain a fundamental understanding of P2E. People invest real money into purchasing NFT-based Axies, play to boost the attributes of their beasts, and then sell them to others for profit. Since gamers depend on being able to sell their creatures for more than their initial investment, it is referred to by many as a "pyramid scheme."

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