TDS POLICY

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From 1st April 2023, the Income Tax department has introduced a new TDS section for winnings from online games i.e., 194BA. As per section 194BA, TDS shall be deducted at the rate of 30% on the net winnings from any online gaming.

The net winnings are calculated at the time, when you place a request for withdrawal (or at the year-end on the closing balance). TDS is calculated @ 30% on the net winnings comprising of Withdrawal/Closing Balance at year-end.

Salient points to know:

1. TDS will be deducted at the time of withdrawal
2. TDS will be applicable only on net winnings during withdrawals and not deposits
3. Your deposit and withdrawal ledger will become 0 at 00:00 hours on 1st April of every financial year (FY)
4. Net winnings = [Total withdrawals in FY - (Total deposits in FY + Net winnings which have incurred TDS during the FY + Opening balance)]

How is TDS calculated at RummyBo?

1. TDS will be deducted at the time of withdrawal and at the year end.
2. Financial Year (FY) is from 1st April to 31st March every year.
3. Your deposit and withdrawal ledger will become 0 at 00:00 hours on 1st April of every financial year.
4. Net winnings = [Total withdrawals in FY - (Total deposits in FY + Net winnings which have incurred TDS during the FY + Opening balance as of 1st April 00:00 hours)]
5. If your net winnings at the time of making a withdrawal is positive (greater than 0), 30% TDS will be applicable on any withdrawn amount.

Let us understand this with a few examples:

Scenario 1

On 1st April, you have Rs. 7,000 in your winnings balance and Rs. 8,000 in deposit balance. Now you want to withdraw Rs. 7,000 on 3rd April. In such a situation, no TDS will be applied. The calculation will be as below:

Scenario 2

Now consider that you deposit Rs. 3,000 in the current FY. Your opening deposit balance was Rs. 8,000 and you have already withdrawn Rs. 7,000. Now you want to withdraw Rs. 5,000 more. The calculation will be as below:

In the above case, you could have withdrawn Rs. 4,000 without tax instead of Rs. 5,000. However, since you are withdrawing Rs. 5,000, Rs. 300 will be deducted from the remaining Rs. 1,000 and you will receive Rs. 4,700 in your bank account.

Scenario 3

If TDS has been applied to your previous withdrawals, then no TDS is applicable on withdrawals till your net winnings exceed the amount for which you have already paid TDS.

If you try to withdraw Rs. 5,500, no TDS will be deducted. You can withdraw up to Rs. 6,000 without any TDS.

However, if you wish to withdraw Rs. 10,000, TDS will be charged on the remaining Rs. 4,000 @ 30% which is Rs. 1,200. Post it, you will receive Rs. 8,800 in your bank account.

What if you end up paying extra TDS?

At the end of the financial year 23:59 hours on 31st March, your final TDS will be calculated depending on the financial year net winnings.

Since the winnings earned from Online Gaming are chargeable to tax @ 30%, you need to file your ITR request and the total TDS deducted can be adjusted against the winnings liable for tax. If any excess TDS is deducted, the same can be claimed back while filing ITR request.

How can you get the TDS Certificate?

We deduct TDS and deposit the same with the Indian Government. If you have provided your PAN Card, you can view the TDS deduction details in your 26AS (which is updated every quarter).

FAQs

1. What are the new changes to the TDS Policy?

Starting from April 1, 2023, online gaming platforms will be subject to new tax regulations approved by the Indian government. According to the new Finance Act, 2023, online gaming platforms must deduct tax at source (TDS) either at the time of withdrawal or at the end of the financial year. The TDS rate will be 30% of a player's net winnings, which means the sum of all winnings minus the total entry fee paid by the player in the year. This tax will only apply to the extent that the net winnings are withdrawn.

2. What is ‘net winnings’?

'Net winnings in a game' means the total amount won by the user in a game minus the total entry/joining fee paid in that game. 'Net winnings' in any period means the sum of net winnings in all games played in that period.

3. How is TDS calculated on ‘net winnings’?

TDS is calculated as 30% of the net winnings, but only if the net winnings are greater than zero. If the net winnings are negative, there will be no TDS deducted. So, if the net winnings are ₹1,000, then the TDS deducted will be ₹300, which is 30% of the net winnings.

4. If I win more than ₹10,000 in a cash game or a tournament, will TDS be deducted?

No, you will not be required to pay TDS at the end of a cash game or tournament, even if you win more than ₹10,000. However, please note that your winnings will be considered for the calculation of net winnings, and TDS will be applied when you withdraw your winnings, according to the new policy.

5. What happens if my ‘net winnings’ goes negative by the end of the financial year?

In the event that your net winnings reduce or become negative at the end of the financial year, you may file your tax returns and claim refunds from the income tax department based on your overall tax liability. It's important to note that you should consult with a tax adviser for more information on this process. RummyBo will provide TDS certificate(s) that you can use to file your tax returns. However, please be aware that RummyBo will not refund any excess TDS to players.

6. What happens to my account balance after 31st March, 2023? Will TDS be deducted if I make a withdrawal?

No TDS will be deducted on any withdrawals made until 31st March 2023. Any balance in your account on 31st March 2023 will be carried forward to the following day. However, please note that for any withdrawals made on or after 1st April 2023, TDS will be calculated based on the net winnings from the games played starting from 1st April 2023 onwards.

7. What do I need to do to make a withdrawal?

To initiate a withdrawal, it is mandatory to finish your KYC, which includes verifying your Aadhaar Card and PAN details. Please complete your KYC verification before placing a withdrawal request.

8. Will TDS be applicable for every withdrawal I make?

TDS will only be applicable on redemptions where you have positive net winnings that have not been taxed yet. The amount of TDS deduction depends solely on your net winnings. If you have paid TDS in previous withdrawals, then no TDS is applicable on withdrawals till your net winnings exceed the amount for which you have already paid TDS.

9. No TDS was deducted on my last withdrawal. Why was TDS deducted this time?

TDS is only applicable if you have positive net winnings. If TDS was not deducted on a previous withdrawal, it's possible that you didn't have positive net winnings at the time. Please check your account summary to confirm your net winnings for both withdrawals.