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Microlesson · 5-min read

Section 194BA - TDS on Net Winnings from Online Gaming

# Section 194BA - TDS on Net Winnings from Online Gaming

## Key Parameters

  • Rate: 30%
  • Trigger Points:
  • At time of withdrawal
  • Amount remaining in account at end of F.Y.
  • If winnings is in kind or partly in kind, payer shall release winnings only after deducting tax

## Important Terms

  • Online Gaming Intermediary: An intermediary that offers one or more online games
  • User: Any person who accesses or avails any computer resource of an online gaming intermediary
  • User Account: Account of a user registered with an online gaming intermediary

## CBDT Guidelines for 194BA - No TDS on Withdrawal If ALL Conditions Met

1. Net winnings comprised in the amount withdrawn is ≤ ₹100 in a month

2. Tax not deducted due to this concession is deducted when:

  • Net winnings comprised in withdrawal > ₹100 in same month/subsequent month, OR
  • If no such withdrawal → at the end of the FY

3. Deductor undertakes responsibility of paying the difference of tax liability if balance in user account at time of tax deduction is insufficient as per Rule 133

## Valuation of Winnings in Kind

ScenarioValuation
General winnings in kindFMV of such winnings
Purchased by intermediaryPurchase price
Manufactured by intermediaryPrice charged to customers (excluding GST)

Worked example

### Example 1

Example: A user withdraws ₹80 from his online gaming account in May, with net winnings of ₹80 included. Is TDS deductible?

Answer: No. Net winnings (₹80) is ≤ ₹100, so the concession applies. However, if user withdraws another ₹150 (net winnings ₹150) in June, TDS must be deducted on the aggregate ₹230 (₹80 + ₹150) of winnings.

### Example 2

Example: Online gaming intermediary gifts a TV (FMV ₹40,000) as winnings to a user. How is TDS handled?

Answer: Valuation = FMV ₹40,000. TDS @ 30% = ₹12,000. The intermediary must release the TV only after ensuring tax of ₹12,000 is paid.

⚠️ Common exam mistakes

  • Applying threshold of ₹100 to each withdrawal instead of tracking unpaid TDS for later collection
  • Forgetting TDS on balance remaining in user account at end of F.Y.
  • Releasing winnings in kind without first ensuring tax payment
Reference: 194BA
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