Everything You Need to Know About India’s Updated TDS Rules for Fantasy Sports in 2023
August 26, 2024
August 26, 2024
The tax laws remain unchanged, but the policy for Tax Deducted at Source (TDS) has been updated. Previously, users reported their Fantasy Sports Gaming and paid taxes when filing their returns. Now, TDS will be deducted from each withdrawal and at the end of the financial year directly by the fantasy platform. This will simplify tax filing since you’ll only need the TDS certificate from the platform to complete your income tax return.
This updated policy took effect on April 1, 2023, and won’t affect your existing balance. Any balance you have as of March 31, 2023, will not be subject to TDS.
The new tax rules apply to net winnings starting from the next financial year. Net winnings are calculated as your total winnings for the year minus your total investments.
India’s updated TDS policy for Fantasy Sports Gaming was announced in the Union Budget 2023-24 by Finance Minister Nirmala Sitharaman and will be effective from April 1, 2023, as outlined in the Finance Bill 2023.
Under this revised policy, a TDS rate of 30% plus cess will apply to net winnings from online games. Starting April 1, 2023, TDS will be deducted from net winnings at the time of each withdrawal.
Net Winnings are calculated as Total Winnings minus Total Investments within a financial year, which runs from April 1 to March 31.
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Previously, TDS was applied at a rate of 30% plus cess only on winnings exceeding Rs. 10,000 in a single contest. The new policy eliminates this threshold, applying TDS to all net winnings.
TDS will be deducted either when the winnings are withdrawn or at the end of the fiscal year.
Additionally, the new policy mandates that platforms collect users’ PAN (Permanent Account Number) or Aadhaar card details to ensure accurate tax calculations and compliance. The deducted TDS will be submitted to the government within the required timeframe, and users will receive TDS certificates for claiming tax credits during their tax return filings.
Scenario
If your net winnings exceed zero, TDS (Tax Deducted at Source) will be deducted from your winnings when you make a withdrawal.
Example
In this case, if you wish to withdraw Rs. 25,000, your net winnings for the year would be Rs. 15,000 (Rs. 25,000 minus Rs. 10,000). TDS at a rate of 30% plus Cess will apply to this Rs. 15,000.
After TDS is deducted, the remaining amount will be transferred to your bank account.
Section 115BB: This section outlines the tax rules for winnings from lotteries, crossword puzzles, horse races, card games, and other types of gambling. However, online gaming, as described in the new Section 115BBJ, is not covered by these rules.
Section 115BBJ: A new addition to the Income Tax Act, this section explains how online gaming winnings should be taxed. It defines online games as those accessible through a computer or telecommunication device via the internet.
Section 194B: This section deals with Tax Deducted at Source (TDS). It states that TDS must be applied to earnings from lotteries or crossword puzzles exceeding Rs. 10,000 in a financial year. The amendment also extends this tax to new forms of gambling and betting.
Section 194BA: This new section introduces TDS for net earnings from online gaming accounts. TDS will be deducted when winnings are withdrawn from a user’s account during the financial year and from any remaining funds in the account at the end of the year.
The updated TDS policy will now apply to everyone participating in fantasy sports in India. This includes all types of fantasy games like cricket, football, basketball, and more. It’s great news for fantasy sports players because you won’t need to calculate your taxes yourself—the platform you use will handle it for you.
If you’re still feeling a bit confused or overwhelmed, don’t worry! Fantasy Akhada is here to help. We’ve simplified the new TDS rules for 2023 in a short video that you can watch here.
