Online gaming has seen a meteoric rise in recent years. A lot of players of online games like Dream 11 Fantasy Sports and Rummy 11 have won big chunks of money in that period. Now, the taxman has set his eyes on those winnings. The Government has announced its plan to levy taxes on all the income earned through online games. Here are the details.
How will the government charge income tax on online gaming?
The Government used the Finance Bill 2023 to introduce sections 194BA and 115BBJ for taxing the winnings of all online gaming platform users.
What is Section 115BBJ?
Section 115BBJ stipulates that all online gaming winnings will be taxed at a uniform rate of 30 percent, regardless of the winner’s income tax slab.
What is Section 194BA?
Section 194BA has been introduced to manage the tax deducted at source (TDS) in the user’s account every financial year. Section 194BA has ensured that even winnings of less than 10,000 rupees will be taxed.
When will these sections be implemented?
Section 115BBJ and Section 194 BA have been effective since April 1st, 2023. Essentially, all your online gaming winnings (from platforms such as Dream 11 and Rummy 11) will be taxed at 30% from the financial year 2023-24. The implementation of Section 194BA also ensures that TDS will be deducted as well.
What are the real life implications of this?
Let’s say you won Rs. 50,000 on Dream 11 after paying an entry fee of Rs. 5,000. Dream 11 when then deduct a TDS of 30% on your winnings i.e. Rs 45,000. So out of the 45,000 you won (50,000- 5,000), the Government will keep 30% (Rs 13,500) and you will go home with the net winnings of Rs. 31,500.