• Notification Date: 29-05-2023
• Notification No: N/A

TDS Not Chargable if Online Gaming Win stays under Rs 100

Releasing guidelines for Tax Deducted at Source (TDS) for online gaming platforms, the Income Tax department on Monday put a threshold of Rs 100 for deducting tax for winnings from online gaming. Online gaming platforms will not be required to deduct tax at the source for a player if the net winning does not exceed Rs 100. 

The government had inserted a new section 194BA in the Income-tax Act, 1961 through Finance Act 2023 with effect from April 1, 2023, which mandates online gaming platforms to deduct income-tax on the net winnings in the person’s user account. Tax is required to be deducted at the time of withdrawal as well as at the end of the financial year. 

Net winnings of an online gamer would be calculated after subtracting the total deposits and opening balance in the user account from the amount withdrawn. 

Also, the circular said that gaming companies can deposit the tax amounts for April, if not done already, along with the dues for May by June 7 to avoid penal consequences. 

The CBDT said to remove the difficulty in deducting tax at source under section 194BA of the Act for “insignificant withdrawal”, it is clarified that tax may not be deducted on withdrawal on the satisfaction of all the following conditions-  

(i) net winnings comprised in the amount withdrawn does not exceed Rs 100 in a month;  

(ii) tax not deducted on account of this concession is deducted at a time when the net winnings comprised in withdrawal exceeds Rs 100 in the same month or subsequent month or if there is no such withdrawal, at the end of the financial year; and  

(iii) the deductor undertakes the responsibility of paying the difference if the balance in the user account at the time of tax deduction under section 194BA of the Act is not sufficient to discharge the tax deduction liability calculated in accordance with Rule 133. 

Transferring from one user account to another user account, maintained with the same online gaming intermediary of the same user shall not be considered as withdrawal or deposit.