New TDS Norms on E-Gaming Bounty- Budget

February 14, 2023
E-gaming or online gaming market in India

By Rupin Chopra

E-Gaming or Online Gaming Market in India

E-gaming in India has experienced a phase of meteoric growth in recent years fueled by a young and tech-savvy population, advent of skill based games and last but not the least easy access to high-speed data through the length and breadth of India.

In a country of cricket lovers, coming of cricket based fantasy sports games gave a fillip to the already burgeoning phenomenon of online gaming. As per FICCI[1], the market valuation of the fantasy sports genre of online gaming is slated to reach an astounding $3.4 billion by 2024.

Budget Announcements

With an intention to regularize and streamline the revenue generated from this growing industry the Union Minister of Finance Mrs. Nirmala Smitherman in her 5th consecutive annual Budget speech[2] for the fiscal year starting in April 2023 provided a much needed clarity relating to taxability of winnings from online gaming.

During her 2023 budgetary address the Hon’ble Minister proposed a 30% tax on net winnings from online gaming at the time of withdrawal of such winnings by the player or at the end of the financial year along with the removal of Rs. 10,000/- threshold for levying tax deducted at source (TDS) on winnings accrued to players under section 194B[3] of the Income Tax Act, 1961 (Act).

For effecting the aforesaid, the budget added section 115BBJ[4] to the Act which now defines the terms “computer resource”, “Internet” and “online games” and excluded[5] winnings from online gaming from the ambit of section 115BB. The new norms will be applicable from April 1, 2024.

Scenario before the 2023 Budget

Income from winnings of real money from online games was taxable under the head “Income from other sources” under section 115BB[6] of the Act. Unlike income of professional streamers, no deductions are allowed, and tax is chargeable at a flat rate of 30% + applicable cess and surcharge (irrespective of the quantum of winnings) on the gross winning amount credited to the player’s account.

Before the latest proposal the online gaming community enjoyed a threshold of Rs. 10,000/-, beyond which TDS was levied. As per media reports[7] the major players in the industry had requested the Finance Ministry to keep the Rs. 10,000/- threshold limit but to their detriment the said limit was done away with. It was observed[8] that some gaming companies were tweaking/modifying the payout into installments or giving vouchers along with money prizes to circumvent the aforesaid threshold.


The online gaming industry is on its way to reach new heights in terms of market value and user engagement. With Indian player community standing at the cusp of massive online tournaments and engaging further more via Metaverse based games, a robust tax regime is a first step to ensure that the industry is regularized and does not become a source for unaccounted capital in the market.

Last but not the least, a government sanctioned holistic framework for consumer protection and dispute resolution process for those who face the instance of cheating or other unfair trade practices while partaking in gaming tournaments will be a great step in furtherance of public interest.

Shantam Sharma, Intern at S.S. Rana & Co. has assisted in the research of this article.

[1] Available at:

[2] Available at:

[3] Available at:

[4] Available at:

[5] ibid

[6] Available at:,meaning%20as%20in%20section%2074A.

[7] Available at:

[8] ibid

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