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The 2-Minute Summary
The rise of fantasy sports, online card games, and skill-based gaming platforms brought a new TDS provision into the picture. Unlike offline winnings where TDS applies per transaction above Rs. 10,000, online game TDS works differently. It applies on net winnings, and at two specific points: at the time of any withdrawal and at the end of the Tax Year. Net winnings means total winnings minus total deposits made into the gaming account. This prevents TDS from applying on gross winnings when you have invested your own money to play.
Example: Vikram plays fantasy cricket on an app. He deposits Rs. 20,000 during the year and wins Rs. 35,000. Net winnings = Rs. 35,000 minus Rs. 20,000 = Rs. 15,000. TDS applies only on Rs. 15,000, not Rs. 35,000.
Under Income Tax Act 1961: Section 194BA of the Income Tax Act 1961, inserted by Finance Act 2023. Now Section 393(3) Sl. No. 2 under the 2025 Act.
At a Glance
| Item | Details |
| New Act Reference | Section 393(3), Sl. No. 2 of Income Tax Act 2025 |
| Old Act Reference | Section 194BA of Income Tax Act 1961 |
| Who Deducts | The online gaming platform (operator) |
| TDS Rate | 30% |
| Threshold | Nil (TDS on net winnings; no minimum amount exemption) |
| When to Deduct | At time of each withdrawal AND at year-end on remaining balance |
| Form for TDS Certificate | Form 16A |
How Net Winnings Are Calculated
Net winnings at any point are computed as total cumulative winnings minus total cumulative deposits into the user account. The gaming platform tracks this on a running basis throughout the Tax Year. At the time of a withdrawal, TDS applies on the net winnings comprised in that withdrawal. At year-end, TDS applies on any net winnings remaining in the account that have not already been subject to TDS.
| Scenario | Calculation | TDS Applies On |
| Deposit Rs. 20,000, win Rs. 35,000, withdraw Rs. 25,000 | Net winnings = Rs. 35,000 – Rs. 20,000 = Rs. 15,000. Net winnings in withdrawal = proportional amount | Net winnings portion in Rs. 25,000 withdrawal |
| Deposit Rs. 50,000, win Rs. 30,000, no withdrawal | Net winnings at year-end = Rs. 30,000 – Rs. 50,000 = negative (no profit) | Nil. No TDS. |
| Deposit Rs. 10,000, win Rs. 10,000, no withdrawal | Net winnings at year-end = Rs. 10,000 – Rs. 10,000 = Rs. 0 | Nil. No TDS. |
| Deposit Rs. 10,000, win Rs. 25,000, withdraw Rs. 15,000 | Net at withdrawal = Rs. 15,000 profit. TDS on net winnings in that withdrawal. At year-end, TDS on remaining net balance. | TDS at withdrawal and at year-end |
No Threshold: Every Rupee of Net Winnings is Taxable
Unlike most TDS provisions, there is no minimum threshold for online game winnings. Even Rs. 1 of net winnings at year-end attracts TDS. The government closed this gap deliberately when it introduced this provision.
There is also no deduction or exemption available against online game winnings under any provision of the Act. You cannot set off losses from one game against winnings from another, and you cannot claim expenses incurred in playing.
Prizes in Kind: Online Games
If an online game awards prizes in kind (like gadgets or vouchers) with no cash component, the platform must ensure the tax is paid before releasing the prize. In practice, most platforms either deduct from the user’s cash balance or require the winner to pay the TDS separately.
What Qualifies as an Online Game
An online game is any game offered on the internet or computer resources. This includes fantasy sports platforms, online rummy, online poker, skill-based gaming apps, and any other game offering winnings. The provision applies to skill-based and chance-based games equally.
Example: A user on a fantasy football platform picks a team, pays Rs. 500 to join a contest, and wins Rs. 5,000. Net winnings from this contest = Rs. 4,500. TDS applies on the net winning amount at the time of withdrawal.
Practical Compliance Checklist
- If you play online games: Your platform deducts TDS on your net winnings at each withdrawal and at year-end. Check your Form 26AS or AIS to see total TDS credited for the year.
- If you play on multiple platforms: Each platform tracks net winnings independently. TDS is deducted separately on each platform. All are consolidated in your Form 26AS.
- If your net winnings are negative (you lost money overall): No TDS applies. You cannot however claim that loss against any other income.
- When filing your ITR: Report total winnings under Income from Other Sources. Winnings are taxed at flat 30% with no deductions. Claim TDS credits from all platforms.
- If a platform did not deduct TDS: You are still liable to pay the tax on net winnings. Pay self-assessment tax before filing your ITR to avoid interest and penalty.
Online gaming income is now one of the most actively monitored categories by the income tax department. Platforms are required to report TDS to the government, so winnings are automatically visible in the taxpayer’s AIS. File correctly, claim your TDS credits, and pay any balance tax on time.
