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As per the new government rules of TDS, a 30% tax will be deducted from the Net Winnings (total amount received above the total deposits made) for all online real money gaming users, starting from 1st April 2023.
For Example:
If you have deposited ₹1000 and made ₹1500 from that, your Net Winning is ₹1500-₹1000 = ₹500 (total amount received above the total deposits made), and a 30% tax will be deducted from ₹500, meaning:
General Information:
As per Financial Budget 2023, under Section 194BA of the Income Tax Act, 1961. The rate of TDS that has been prescribed on your Net Winnings has been fixed at 30%.
Financial Year is from 1 st April 2024 to 31 st March 2025.
What is TDS or Tax Deduction at Source? How is TDS applicable in Real Money Games?
What is TDS Liability? Can it increase during a financial year?
When is TDS calculated and deducted?
Deduction is done on the amount the User would withdraw.
If your Net Winnings in a financial year or at the time of withdrawal, are positive, TDS at the rate of 30% shall be applicable on your Net Winnings. The following examples show when TDS will be nil and when it is subjected to deduction.
Hence 30% of his net winning i.e., Rs. 1200 shall be deducted at the time of withdrawal. (See the table below. Example no. 1-3)
Example No. | Deposited Amount [D] (Rs) | Amount Won/ Amount Withdrawn [W] (Rs) | Net Winnings [W-D] (Rs) | 30% TDS Deduction Amount (Rs) |
---|---|---|---|---|
1. | 5000 | 2000 | -3000 | nil |
2. | 5000 | 5000 | 0 | nil |
3. | 5000 | 9000 | 4000 | 1200 |
Thus, “A” will get their withdrawal amount only after 30% TDS deduction on their net winnings.
How TDS is calculated at the end of the financial year?
As of 31st March, if your Net winnings are positive, it shall be entitled to 30% deduction, irrespective of any withdrawal made.
Further, if your TDS paid is more than your TDS liability, the difference shall be adjusted in your win wallet on 31st March.
How is TDS deducted at the time of withdrawal?
If your total withdrawals (including the new withdrawal) in the financial year become more than your total deposits, the new withdrawal becomes eligible for a TDS deduction. The total deposits will be the sum of deposits made by you on the app.
Example 1
Total Deposits till date is Rs 3,000
Total Withdrawals till date is Rs 2,500
New Withdrawal amount is Rs 1,000
Total Withdrawals (including the new Withdrawal) = Rs 2,500 + Rs 1,000 = Rs 3,500
Since the total Withdrawals exceed the total Deposits, the new Withdrawal will be eligible for a TDS deduction.
Difference between total Withdrawal and total Deposits = Rs 3,500 - Rs 3,000 = Rs 500
TDS = 30% of Rs 500 = Rs 150
Net Withdrawal amount credited to your bank account = Rs 1,000 - Rs 150 = Rs 850
The TDS amount of Rs 150 paid by you will accumulate to be your total Paid TDS.
Example 2
Total Deposits till date = Rs 5,000
Total Withdrawals till date is Rs 4,500
New Withdrawal amount is Rs 1,500
Total Withdrawals (including the new Withdrawal) is Rs 4,500 + Rs 1,500 = Rs 6,000
Say total Paid TDS till date is Rs 100.
Since the total Withdrawals exceed the total Deposits, the new Withdrawal will be eligible for a TDS deduction.
Difference between total Withdrawal and total Deposits = Rs 6,000 - Rs 5,000 = Rs 1,000
TDS is 30% of Rs 1,000 = Rs 300
TDS deduction applicable on your transaction = Rs 600 - (Paid TDS till date) = Rs 300 - Rs 100 = Rs 200
Net Withdrawal amount credited to your bank account = Rs 1,500 - Rs 200 = Rs 1,300
The TDS amount of Rs 200 paid by you will accumulate to be your total Paid TDS.
Example 3
Total Deposits till date is Rs. 1,000
Total Withdrawals till date is Rs. 500
New Withdrawal amount is Rs. 300
Total Withdrawals (including the new Withdrawal) is Rs. 500 + Rs. 300 = Rs. 800
Since the total Withdrawals do not exceed the total Deposits, the new Withdrawal will not be eligible for a TDS deduction.
Net Withdrawal amount credited to your bank account is Rs. 300.
What is a TDS Certificate? How to obtain a TDS Certificate?
DISCLAIMER: Please note that this TDS calculation mechanism is based upon the understanding of the TDS provisions introduced in the Financial Budget, 2023 which are yet to be clarified in accordance with the Budget. Fabzen reserves its rights to modify/amend the TDS Calculation mechanism based on TDS provisions applicable at the relevant time and upon clarifications received from the Finance Ministry of India.