India’s taxation laws are constantly evolving to keep up with digital trends, and online gaming is no exception. With the exponential rise in fantasy leagues, rummy apps, poker tournaments, and esports winnings, the government has introduced Section 115BBJ of the Income Tax Act to regulate the taxability of such income.
So if you’ve ever thought of winning big through an online game—hold on, because the taxman is watching.
What is Section 115BBJ?
Section 115BBJ of the Income Tax Act provides for the taxation of winnings from online games. Introduced in the Finance Act, 2023, it mandates that any winnings from any online game shall be charged to tax, no matter the platform, no matter the size.
In short, it doesn’t matter whether you won a ₹500 reward on a trivia quiz app or ₹5 lakh in a fantasy cricket league—it’s all taxable.
How Much Tax Do You Have to Pay?
Here's the catch.
Under Section 115BBJ, any game winnings are considered income and are subject to tax at 30%, excluding surcharge and cess. There’s no minimum exemption limit. Whether you win ₹100 or ₹10 lakh, the tax is applied without any basic exemption or deduction under any other section.
TDS on Winnings – The Net is Tight
Not just that, the law also mandates tax withholding on net winnings from online games. This means that before the amount is even credited to your wallet or bank account, the gaming company or platform will deduct TDS (Tax Deducted at Source).
So let’s say you win ₹10,000 on an online rummy platform. You won’t receive the full amount. 30% will be deducted, and only ₹7,000 will land in your account."
What Exactly Falls Under "Online Game"?
This section applies to all types of online games, be it skill-based or luck-based. It includes:
- Fantasy sports (Dream11, MPL, My11Circle)
- Online poker and rummy
- Trivia-based apps
- Casino simulators
- eSports winnings
- Any platform where you earn cash rewards through online gameplay
If it’s a game and you win money from it online, it falls under Section 115BBJ.
When Does the Tax Apply?
The tax applies at the time of withdrawal of the net winnings, or at the end of the financial year, whichever is earlier. Even if you don’t cash out your winnings but keep playing with them on the platform, the tax may still apply.
There’s also a daily tracking mechanism for net winnings, which gaming platforms are now required to maintain. That means there’s no escaping this even through rollover balances.
Is There Any Way to Avoid This Tax?
Short answer: No.
Unlike traditional income, Section 115BBJ doesn’t allow any deduction, exemption, or relief. Whether your income is used for buying virtual coins, joining more contests, or even lost in a future game, it doesn’t reduce your tax liability.
So yes, even if you win ₹1 lakh today and lose it tomorrow, your tax liability on that ₹1 lakh stays intact."
Important Compliance Points
- You must report your online gaming income under the "Income from Other Sources" head if you’re not in business.
- If you’re a regular gamer or streamer, you may even need to file under business income.
- TDS certificates (Form 16A) from platforms must be collected and reported in your ITR.
Final Word
Gaming might be fun, but tax compliance isn’t a game. Whether you're a casual player or a serious streamer, don’t let your winnings land you in trouble.
📌 Need help filing tax returns with online gaming income? Visit Callmyca.com and let our experts make your tax filing as smooth as your gameplay.
