TDS on Winnings
As per the Finance Bill passed by the Govt. of India, new tax laws are applicable on Online Gaming apps from April 1st, 2023. As per the law, Platforms offering Online Games are required to deduct tax at source (“TDS”) at the time of withdrawal or at the end of the Financial Year. TDS shall be levied at the rate of 30% for all the net winnings of a Player. Here, net winnings shall mean the difference between all winnings and the entry fee paid by a Player for a year.
What are the latest changes to TDS (Tax Deducted at Source) on online gaming apps?
- As per the Finance Bill passed in 2023, all Real Money Gaming Apps are mandated to deduct tax at the rate of 30% on users’ Net Winnings.
What is ‘Net Winnings’?
- Net Winnings is the difference between total money won and entry fees paid by a player. For example, if a player plays 100 games by paying an entry fee of ₹1000 for all 100 games put together. From these 100 games, if the Player wins ₹2000, the Net Gain will be equal to ₹2000 (winnings) - ₹1000 (entry fee) = ₹1000.
- The Net Winnings will reset at the start of every financial year.
How is tax calculated on 'Net Winnings'?
- Tax will be calculated at 30% of Net Winnings. Taking the above example, 30% of ₹1000 = ₹300 will be considered as TDS.
When will the tax be deducted?
- If there is a tax liability at the time of withdrawal, the tax will be deducted on net winnings. Other than this, if there is a pending tax liability at the end of the financial year, the balance amount will be deducted from the player’s wallet.
If my ‘Net Winnings’ go down during the year, can I get a refund of the TDS already deducted?
- Players can file returns with the income tax department and claim refunds subject to the Player’s overall tax liability. Games24x7 will be issuing all required certificates for doing so. However, we will not be able to refund the excess TDS from our end directly to any Player.
How can I get my Tax Certificate to file IT Returns?
- Tax Certificates will be issued within 1 month from the last date of filing TDS returns for every quarter.
I play on both Rummy Ambarella. How will this impact me?
- Players playing all games offered by Games24x7 have a common wallet across games. So, for taxation, the entry fee paid for all games will be deducted from the winnings from all games. The balance amount will be considered for taxation at the rate of 30%.
In case you have any queries, please contact our customer support team at info@ambarellabrandsecommerce.com or info@ambarellabrandsecommerce.com.
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