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May 27, 2023
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TDS on online games winnings: How companies will deduct tax as per CBDT guidelines
The Central Board of Direct Taxes (CBDT) has issued guidelines on how online gaming companies have to deduct tax from an individual's winnings. The guidelines have been issued via a circular and notification dated May 22, 2023. The guidelines come after the government removed the threshold for deducting TDS on winnings from online games in the Budget 2023.
According to the latest announcement, online game companies are required to deduct TDS on every rupee earned from winning an online game. This rule kicks in from April 1, 2023, and is applicable from FY 2023-24. Till the previous financial year (FY 2022-23), TDS on winnings from online games was applicable if the winning amount exceeded Rs 10,000 in a financial year.
Now the TDS will be deducted under the newly introduced Section 194BA of the Income Tax Act, 1961. The TDS rate on winnings from online games is 30% under Section 194BA.
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