Tax on Online Gaming

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The online gaming industry in India has experienced unprecedented growth over the past decade, and experts predict it to reach a staggering $5 billion by 2025. However, with this growth comes increased scrutiny from regulatory bodies, including the Central Board of Direct Taxes (CBDT), which recently introduced significant changes to the taxation policies governing online gaming.

1. Background

Online gaming platforms have become immensely popular, offering a wide array of games ranging from card games to battle arenas and quizzes. Moreover, many of these platforms allow users to play for real money, adding an additional layer of complexity to their tax implications.

2. Recent Developments

The E-Gaming Federation (EGF), Federation of Indian Fantasy Sports (FIFS), and All India Gaming Federation (AIGF) have collectively lobbied the CBDT to reconsider recent changes to the Tax Deducted at Source (TDS) regime, which came into effect on April 1st, 2023.

3. Taxation on Winnings

Under the current regime, online gaming organizations are required to deduct a 30% TDS on winnings exceeding ₹10,000 per transaction. However, the Finance Bill 2023 introduced Sections 115BBJ and 194BA to tax users’ winnings differently based on their annual income from gaming platforms.

  • Section 115BBJ: Taxes net winnings from the previous fiscal year at a flat rate of 30%.
  • Section 194BA: Deals with TDS applicable on net winnings in the user’s gaming account at the end of the fiscal year.

These changes suggest a shift towards taxing winnings below ₹10,000 and could have significant implications for gamers.

Here you can get to know the complete details how to apply tax on online gaming, this is latest flyer of Income Tax Department on Taxation on Online Gaming

Source Income Tax Department

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Pooja Gupta

CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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