Section 194BA - Winnings from online games - Income Tax - Ready Reckoner - Income Tax

Winnings from online games Section 194BA [Inserted by FA, 2023 , w.e.f., 01-04-2023 Read with Section 115BBJ ] who is responsible to deducted TDS : Any person responsible for paying to any person any income by way of winnings from any online game during the FY shall deduct income-tax on the net winnings in his user account, At which time Tax should be deducted:- Tax should be deducted at the end of financial year. However, In case of withdrawal from user account during the financial year, TDS shall be at the time of such withdrawal on the net winnings comprised in such withdrawal, as well as on the remaining amount of net winnings in the user account, computed at the end of the FY. In case winnings is wholly in kind or partly in cash: In a case where the net winnings are wholly in kind or partly in cash, and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the net winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the net winnings. Deductee: Any person ( user - who accesses or avails any computer resource of an online gaming intermediary) winning from online gaming. Threshold Limit :- There is no threshold Limit. Rate of TDS: 30% on Net winning online Game calculated according to rule 133 of Income tax rule, 1961. Rate of TDS will be increase by the surcharge Cess if recipient of winning is non- resident. Powers of CBDT to issue Guidelines [ Section 194BA(3) ] If any difficulty arise in giving effect to the provisions of this section, THE CBDT may, with the previous approval of the Central Government, issue guidelines for the purposes of removing the difficulty Guidelines for removal of difficulties under section 194BA(3) of the Income-tax Act, 1961. [ Vide Circular NO. 5 of 2023 dated 22.05.2023 ] Other Important Point The deductor may deduct the tax u/s 194BA and pay to the Government. In the Form 26Q the deductor will need show this as tax deducted by him on net winning u/s 194BA.