Won money on Dream11? Here's how much tax you owe
What's the story
The Indian government has a strict tax regime for online gaming. Winnings from platforms like Dream11 and Rummy are taxed at a flat 30% under Section 115BBJ of the Income-tax Act. This tax is levied from the first rupee earned, without any exemptions or deductions. Surcharge and cess are added on top of this flat rate, making income from online games one of the most heavily taxed categories in India.
Tax rules
No loss adjustments allowed
Unlike stock market investments, where losses can be offset against gains, online gaming income doesn't offer such flexibility. Losses from online games can't be adjusted against winnings or any other income, nor carried forward to future years. The ITR filing system even disallows negative figures in the "online gaming" section. Only positive net winnings are recognized for taxation purposes.
Tax deduction
Gaming platforms deduct tax at source
Online gaming platforms are responsible for deducting tax at source (TDS) from players' winnings. According to Section 194BA of the Income-tax Act, "net winnings" is defined as withdrawals plus closing balance, minus opening balance and non-taxable deposits. This ensures that gaming companies deduct tax before players even receive their money.
Consequences
Consequences of not reporting gaming income
Failing to report gaming income can lead to tax department notices. In cases of deliberate concealment, prosecution is possible under provisions like Section 139(1), Section 142(1), or Section 148. However, prosecution isn't automatic and is only applied in proven cases of willful default. Even small wins are technically taxable under this strict regime for online gaming.
Filing requirement
Even ₹10 wins are taxable
Rule 12BA of the Income Tax Rules, 1962 mandates ITR filing if aggregate TDS or TCS in a financial year exceeds ₹25,000. This rule applies even if your total income is below the standard exemption limit of ₹2.5 lakh. The strict tax regime for online gaming ensures that even winnings as small as ₹10 are chargeable to tax and must be disclosed under 'Income from Other Sources.'