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Finance Ministry Issues Guidelines On Calculating TDS On Net Winnings Under Gaming Tax Regime

The guidelines cover topics such as multiple wallets on gaming platforms, taxable and non-taxable deposits, bonuses and incentives, etc.

We missed this earlier: After some confusion over how to implement the government’s taxation regime for online gaming introduced in this year’s Budget, the Ministry of Finance has come out with guidelines on how to compute tax to be deducted at source on an online gamer’s “net winnings”.  Why it matters: The guidelines, dated May 22nd, add some certainty to the mix for the sector—although how easy the regime is to follow will only become apparent once gaming companies’ accountants get to work. In any case, taxing net winnings for games may be a win-win for platforms and users, as Stella Joseph and Yash K. Desai wrote for MediaNama earlier this year: "At present, while the law requires the tax to be deducted/paid on “winnings”, practically various players are taking the position that this would apply to net winnings (after deduction of elements like Contest Entry Amount [CEA], cash bonus etc). Since the user ultimately receives only net winnings after these charges are reduced, it is justified that the taxation is also imposed on the “net winnings”. This proposal is also in tune with the actual modalities of how such platforms operate the games, where there are multiple series/levels in the games and ultimately the winnings earned over many days are net in nature (after adjustment at several series/levels)." Which ‘tax regime’ are we talking about?: Section 194BA, newly inserted into the Income Tax Act earlier this year. It says that “tax deducted at source”, or TDS, on online gaming winnings during…

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I'm interested in stories that explore how countries use the law to govern technology—and what this tells us about how they perceive tech and its impacts on society. To chat, for feedback, or to leave a tip: aarathi@medianama.com

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