As per the government of India, new TDS policy rules will apply from April 1, 2023, to the online game winnings of all users. The old TDS policy before March 31, 2023, imposed TDS on the winnings from online games exceeding ₹10,000. However, after the introduction of the new rules, online gaming platforms will levy a 30% TDS on the net winnings of users upon withdrawal.
If you play real money games online, here’s everything you need to know about the new TDS policy.
What is TDS?
TDS implies Tax Deducted at Source. According to the latest government policies, the online game winnings of users playing real money games on an online gaming platform will be subject to tax deductions. The TDS will be deducted only from the Net Winnings of the users.
Old TDS Policy vs New TDS Policy Rules
Old TDS Policy
According to the old TDS Policy before 31 March 2023, any winnings above ₹9999 were liable to TDS deductions. There was no TDS imposed on withdrawals below ₹10,000. For instance, if a user wins ₹12,000 (which is above the ₹10,000 threshold) in an online game, there will be a TDS of ₹3,600 (30% on 12,000), and the user will receive ₹8,400 upon withdrawal.
New TDS Policy
According to the new TDS Policy, all net winnings are liable to TDS deductions of 30% at the time of withdrawals w.e.f April 1, 2023. Net winnings exclude all the deposit amounts, opening balances, and withdrawals on which TDS is already paid from your total Withdrawals for the entire financial year.
Important TDS Terms
– Deposits: Total amount deposited by a user in their game wallet during a financial year (FY).
– Withdrawals: Total amount submitted as a withdrawal request by a user during a financial year (FY).
– Net winnings: [Total withdrawals in FY – (Total deposits in FY + Net winnings which are liable for TDS deduction during the FY + Opening balances )]
Calculation of Net Winnings and TDS
Based on the above formula of net winnings, we can calculate the amount of TDS that will be deducted. Let’s take an example:
Deposits in the FY: ₹1000
Total winnings: ₹2000
Net winnings: Total Winnings – Total Deposits = (2000-1000) = ₹1000
TDS applicable on net winnings post-withdrawal: 30% of ₹1000= ₹300
Net receivable amount on withdrawal: 1000-300 = ₹700
Looking at other instances,
| TotalDeposits | Withdrawals | Total Withdrawals in FY | Total Deposits in FY | Net Winnings on which TDS is Paid | Taxable Net Winnings | TDS | Net Withdrawals in Bank Account | |
| Apr 17 | 100,000 | 150,000 | 150,000 | 100,000 | 0 | 50,000 | 15,000 | 135,000 |
Suppose, on April 17, a user deposits ₹100,000 and withdraws 150,000 after winning some amount.
The total withdrawal for the financial year is 100,000
The net winnings, in this case, is 150,000 – 100,000 = 50,000
TDS on the net winnings = 50,000 x 30% = 15,000
Net Withdrawals = 150,000 – 15,000 = 135,000
| Total Deposits | Withdrawals | Total Withdrawals in FY | Total Deposits in FY | Net Winnings on which TDS is Paid | Taxable Net Winnings | TDS | Net Withdrawals in Bank Account | |
| Apr 17 | 100,000 | 150,000 | 150,000 | 100,000 | 0 | 50,000 | 15,000 | 135,000 |
| Apr 18 | 100,000 | 50,000 | 200,000 | 200,000 | 50,000 | -50,000 | 0 | 50,000 |
| Total | 200,000 | 200,000 | 200,000 | 200,000 | 50,000 | 50,000 | 15,000 | 185,000 |
Now, on April 18, the user deposits another 100,000 and withdraws 50,000
The total withdrawals will be = 150,000 + 50,000 = 200,000
The total deposits to date are 100,000 + 100,000 = 200,000
Net winnings on which TDS is already paid = 50,000
Therefore, Taxable Net winnings = Total Withdrawals – Total Deposits – Net Winnings on which TDS is Paid = 200,000 – 200,000 – 50,000 = -50,000
So, TDS on net winnings will be zero.
Learn about Net Winnings and TDS Calculation.
TDS Policy on MPL
Following the new TDS Policy w.e.f April 1, 2023, MPL will also deduct a 30% TDS on all net winnings of users upon withdrawals only. MPL will also issue all users with a TDS certificate against deductions incurred by them on net withdrawals during a financial year. This certificate will help users file ITRs against all taxes paid in online gaming and get tax refunds. If you have submitted your PAN number and PAN Card to MPL, the TDS amount will get reflected on your Form 26AS, which will be updated at the end of every quarter. MPL will provide TDS certificates to you at the end of every Quarter, provided that you have shared your PAN Card with MPL.
FAQs
How much tax will be deducted as per the new TDS Policy?
As per the new TDS Policy, a 30% tax on the net winnings from an online real money game will be deducted upon withdrawal.
When is TDS Deducted?
TDS on all net winnings will be deducted only at the time of withdrawal.
Will every withdrawal of mine attract a TDS of 30%?
No, At every withdrawal, your net winnings are calculated, and TDS is charged only on profit amounts.
Is MPL charging this TDS?
No, the TDS charged will go to the Government of India, just like any other income tax.
How can I reduce my tax liability?
Avoid doing multiple transactions/withdrawals. Instead, try to accumulate the winnings and withdraw once a month.
My TDS has been deducted, will I get any TDS certificate for the same?
MPL will provide a TDS certificate every quarter in a financial year.
What if I end up paying extra TDS?
This can happen if a withdrawal is made when net winnings are positive and at the year-end, the user is in net losses). At the end of the financial year, 00:00 hrs on 31st March, your final TDS will be calculated depending on the financial year’s net winnings. Since the winnings earned from Online Gaming are liable for 30% TDS, users need to file their ITR 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.
For more questions on the TDS Policy, click here.
