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Digital economy · Online Gaming

Sec 194 (old 115BBJ): the net winnings formula

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  1. Facts

    From FY 2023-24, all online gaming income is taxed under Sec 115BBJ (now Sec 194 Table Sl. No. 5, Income-tax Act 2025) at 30% on "net winnings".

  2. Provisions and law

    • IT Act, Sec 194 (old 115BBJ) | Sec 393 (old 194BA) | Finance Act 2023

  3. Analysis

    Net winnings formula: Net winnings = Amount withdrawn from gaming account − Amount deposited into gaming account at the time of withdrawal (subject to limitations). How it works in practice: You deposit ₹10,000 on Dream11. You win ₹50,000. You withdraw ₹60,000. Net winnings = ₹60,000 − ₹10,000 = ₹50,000. Tax = ₹15,000 (30%). Platform deducts ₹15,000 as TDS (Sec 393, old Sec 194BA) before crediting your bank account. You receive ₹45,000. Multiple deposits: If you deposit ₹10K, lose it, deposit ₹10K again, then win ₹50K, and withdraw ₹50K, net winnings calculation considers your net deposit position. The exact formula is complex, the platform's system handles it for TDS, but you must report correctly in ITR.

  4. Conclusion

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