The New TDS Deduction Rule for Real Money Online Games April 2023

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By Aakriti Kapur Whats New | Updated On: Apr 03, 2023 06:15 AM

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Note: This note is purely meant as a bona fide effort to educate our users. This is by no means to be seen as any Legal or Tax advice, and users are encouraged to seek their own Legal and Tax advice before relying upon its contents. 

What is TAX DEDUCTED AT SOURCE (TDS)?

Tax Deducted at Source (TDS) is a tax collection mechanism in India that aims to collect tax from the income earned by an individual and pay it to the government. 

In India, TDS is applicable to different types of payments made by individuals or entities, including payments made to contractors, professionals, and other service providers. For instance, if an app developer or an app publisher is earning income from in-app purchases, advertisements, or other sources that are somehow related to the app, they may be liable to pay TDS on the income earned. 

TDS Applicable to All Online Game Net Winnings

Previously, TDS was only applicable in cases where the player’s winning exceeded ₹10,000. Also, the tax on such winnings was governed by Section 115BB of the Act, which imposed a 30% tax.

Now TDS will be deducted from all net winnings. As per the Finance Bill, 2023, Section 194BA has been introduced as a new section, which shall apply to online gaming operators from 1st April 2023.

Therefore, as per the new tax regime for the financial year 2023-24, Junglee Games India Private Limited has to deduct 30% TDS on all net winnings, as explained below.

Under Section 194 BA

  • The TDS rate is 30%. This is the same as the previous rate.
  • TDS is to be deducted from net winnings. Previously, it was applicable to gross winnings over ₹10,000 won in a single game or tournament.
  • Tax liability will be applicable only at the time of withdrawal or on your withdrawable balance at the end of the financial year.
  • The ₹10,000 threshold no longer exists

How is TDS deducted?

The TDS is deducted at the time of withdrawal. The withdrawal amount, TDS liability, and TDS paid (actual TDS deducted) are taken into consideration when calculating the TDS amount. The TDS to be deducted is the TDS due subject to a maximum of 30% of the withdrawal amount.

To learn more about this policy and understand its application, visit:- https://www.jungleerummy.com/tdspolicynew

FAQs

What are the new TDS rules for online gaming? 

As per the new rules, TDS is to be deducted from all net winnings at the time of withdrawal or from the withdrawable balance at the end of the financial year.

What is the new tax rate for online game winnings?

All net online game winnings will be subject to 30% TDS starting from 1st April 2023.

What is the TDS rate on gaming services? 

TDS deducted on net winnings on online gaming apps is 30%.

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