Short answer: Budget 2023 introduced a dedicated TDS rule for online gaming: from 1 July 2023, platforms had to deduct 30% TDS on net winnings, with no ₹10,000 threshold, at withdrawal and at the end of each financial year. The Income-tax Act, 2025, in force from 1 April 2026, carries this rule forward in its consolidated TDS section (section 393). Separately, the Promotion and Regulation of Online Gaming Act, 2025 has banned real-money online games in India since 1 May 2026, so most Indian players should no longer be earning such winnings at all.
Last updated: 13 October 2026.
Our 2023 article argued why the government made this move. Three years on, the picture has changed twice: a new Income-tax Act and a ban on online money games. This rewrite explains what the TDS rule was, how winnings are taxed, what changed in 2026, and what it means for anyone with past winnings or a pending return.
What Budget 2023 changed
| Before Budget 2023 | After Budget 2023 (from 1 July 2023) |
|---|---|
| Online game winnings were covered under the general rule for lotteries, puzzles and games | A separate TDS section for online games (section 194BA of the 1961 Act) |
| TDS applied only when a single winning exceeded ₹10,000 | No threshold: TDS on all net winnings |
| Platforms could split winnings to stay under the threshold | TDS calculated on net winnings in the user account, at withdrawal and at year-end |
| Taxed at a flat 30% | Still a flat 30%, with no deductions or basic exemption allowed |
The Income Tax Department’s explanation of section 194BA sets out the mechanism: tax is deducted on net winnings at the time of withdrawal, and on any net winnings left in the account at the end of the financial year. Where winnings are given in kind, the platform must ensure the tax is paid before releasing them.
Why the government made this move
- Closing a loophole: with a per-game ₹10,000 threshold, many winnings escaped TDS because they were split into small amounts.
- Traceability: TDS creates a record in the player’s Form 26AS and annual information statement, making it harder to leave winnings out of returns.
- Revenue: online gaming had grown fast, and most winnings were going unreported.
- Fairness in calculation: taxing net winnings (withdrawals minus deposits) instead of every individual win addressed the industry’s complaint that gross-win TDS overtaxed players.
Our earlier version also suggested the tax would discourage gambling. That was opinion rather than an effect the rule was designed for; the 2025 law described below, not the tax, is what now restricts money gaming.
How net winnings were calculated: a worked example
Example (illustrative, under the TDS rule): In a financial year, Kiran deposits ₹10,000 into a gaming account and later withdraws ₹25,000.
| Item | Amount |
|---|---|
| Total withdrawals | ₹25,000 |
| Less: total deposits | ₹10,000 |
| Net winnings | ₹15,000 |
| TDS at 30% | ₹4,500 |
| Amount credited to bank | ₹20,500 |
On his return, the ₹15,000 is taxed at a flat 30% plus 4% health and education cess (31.2%, or ₹4,680), whatever his slab and whichever tax regime he chooses. The ₹4,500 TDS is credited against that, so he pays ₹180 more. He cannot claim expenses, cannot use the basic exemption limit against this income, and cannot set gaming losses off against these winnings or other income.
Keep your platform statements, deposit and withdrawal records and TDS certificates for each year. If the TDS shown in your annual information statement does not match your records, contact the platform first, since it must correct its TDS return for the change to appear.
What changed in 2026
1. New Income-tax Act from 1 April 2026
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. TDS provisions that were spread across many sections (194B, 194BA and others) are now grouped in section 393, with winnings from lotteries, games and online games listed in its tables. The rate for online game winnings remains 30%. Section numbers on your Form 26AS and TDS certificates for payments from 1 April 2026 will follow the new Act. For returns for years up to 2025-26, the 1961 Act’s sections still apply. See our income tax hub for more on the new Act.
2. Ban on online money games from 1 May 2026
The Promotion and Regulation of Online Gaming Act, 2025 received assent in August 2025, and its provisions and rules took effect on 1 May 2026. It prohibits offering or facilitating online money games, defined by whether users stake money expecting a monetary return, regardless of whether the game is based on skill, chance or both. E-sports and social games without money stakes are permitted. Banks and payment providers are barred from processing payments for online money gaming services, and advertising such games is an offence. The Act’s validity has been challenged in court, so watch for developments.
What this means for you now
- Past winnings still count. Net winnings for 2023-24, 2024-25 and 2025-26, including April 2026, must be reported in your returns and taxed at 30%. Check your annual information statement on the income tax e-filing portal.
- Year-end balances: if a platform shut down with money in your account, check whether TDS was deducted on net winnings and whether the balance was refunded.
- Offshore and illegal platforms: using them now carries legal and financial risk, and payments to them can be blocked. Losses there are unrecoverable and not deductible.
- Notices: if you received TDS credit for winnings but did not declare them, consider filing an updated return within the time allowed.
The money angle: gaming and debt
Many people who got into trouble with real-money gaming funded it with credit cards, personal loans or instant app loans, chasing losses. If that sounds familiar, stop borrowing to play and list your debts. Paying down the most expensive ones first, or consolidating them into one EMI, can stop the cycle. Our guides on common reasons people fall into a debt trap, EMI consolidation and getting out of loan app debt can help. Use our savings calculator to turn what you used to spend on gaming into a monthly saving goal.
Struggling with several high-cost loans? Compare consolidation loan offers from RBI-regulated lenders.
For other tax topics, see how employees can save tax and how to update bank details in your ITR.
Frequently asked questions
What is the TDS rate on online gaming winnings?
30% of net winnings, with no ₹10,000 threshold, under the rule introduced from 1 July 2023 (section 194BA of the 1961 Act), now carried into section 393 of the Income-tax Act, 2025.
How are online gaming winnings taxed in my return?
At a flat 30% plus 4% cess, under either tax regime. No expenses, basic exemption or loss set-off are allowed against them. TDS deducted is credited against the tax.
Are online money games legal in India in 2026?
The Promotion and Regulation of Online Gaming Act, 2025 prohibits online money games from 1 May 2026, whether based on skill or chance. E-sports and free social games are allowed.
Do I still need to report winnings from earlier years?
Yes. Winnings from earlier years must be reported in the return for that year. Check your annual information statement for TDS reported by platforms.
What were net winnings under the TDS rule?
Broadly, withdrawals during the year minus deposits (and opening balance), calculated per user account, with TDS deducted at withdrawal and on the year-end balance.
Sources
- Income Tax Department: Section 194BA
- Income Tax e-filing portal
- Promotion and Regulation of Online Gaming Act, 2025 (NeGD)
Disclosure: FundsTiger (Gatimaan Finance Advisors Pvt. Ltd.) is a loan marketplace and lending service provider for RBI-regulated lenders. Aparampaar Finance Pvt. Ltd. (Omozing), one of those lenders, is a related party of FundsTiger. This article is general information, not financial advice. Read your loan agreement and KFS before you decide.