Winnings from Online Games

Winnings From Online Games

Introduction
Income from online games is taxable under Section 115BBJ of the Income-tax Act, 1961, at a flat rate of 30%. The Finance Act, 2023, introduced a new scheme for taxing such winnings, effective from the assessment year 2024-25. Tax is deducted at source (TDS) under Section 194BA at the rate of 30% at the time of withdrawal or at the end of the financial year if no withdrawal is made.

Meaning of an online game

"online game" means a game that is offered on the internet and is accessible by a user through a computer resource, including any telecommunication device.

Taxability of Winnings from Online Games

• Net winnings from online games is taxed under Section 115BBJ at a rate of 30%, irrespective of whether it is a game of skill or chance.

• Net winnings are computed as prescribed under Rule 133 of the Income-tax Rules.

TDS Provisions on Online Gaming Winnings

• Section 194BA applies to all online gaming winnings from 01-04-2023.

• Tax is deducted at 30% on the net winnings:

о At the time of withdrawal.

о At the end of the financial year if no withdrawal is made.

No Basic Exemption Limit

• The benefit of the basic exemption limit is not available

No deduction/allowance

• No deduction, including those under Chapter VI-A (e.g., 80C, 80D), is allowed for income from lotteries, puzzles, races, games, gambling, or betting.