As per the provisions of the Indian Income Tax Act, 1961, the winnings from the game will be subject to the provisions of Tax Deduction at Source (TDS) on their winnings. The TDS rate is presently 30% (+ Education Cess @4%) (Effective Rate of TDS on ‘Net Winnings’ Amount = 31.20%) for gaming winnings under Section 194BA of the Income Tax Act.
Here’s an example of how TDS is calculated on winnings:
Calculation of ‘Net Winnings’ is provided under Rule 133 of the Income Tax Rules. (See Rule 133 of the Income Tax Rules)
TDS will be applicable only at the time of withdrawal of winnings.
TDS will not be deducted if the Player again uses that money for playing the game.
‘Achievers’ will issue a TDS Certificate from the Income Tax Department for the tax deducted to the Player so that the Players can claim TDS Credit while filing their Annual Income Tax Return.
GST on online gaming in India is currently taxed at a 28% rate, which applies to both games of skill and games of chance. However, how the GST is applied can vary depending on the nature of the game and how revenue is generated (e.g., entry fees, prize pools, etc.). The government continues to evaluate the most appropriate regulatory framework and tax policy as the industry evolves, leading to potential changes in the near future.
