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Winnings from such platforms are not treated like regular income; instead, they are governed by a special set of rules that leave little room for exemptions.
Online Gaming Tax.
If you’ve ever won money on Dream11, Rummy, or any other real-money gaming platform, the income tax department wants a share. Though online gaming platforms, including Dream11 and Rummy, have announced discontinuation of the services after Parliament passed the Online Gaming Bill 2025 to ban the real money games, those who played the games in FY25 need to report the gains/ losses in this year’s ITR AY2025-26. Here’s all you need to know:
Winnings from such platforms are not treated like regular income; instead, they are governed by a special set of rules that leave little room for exemptions.
Flat 30% Tax From the First Rupee
Income from online games is taxed at a flat 30% under Section 115BBJ of the Income-tax Act. This rate applies from the very first rupee earned, without the benefit of the basic exemption limit or standard deductions. Surcharge and cess are levied on top of this flat rate, making gaming income one of the most heavily taxed categories.
No Relief for Losses
Unlike stock market investments where losses can be offset against gains, gaming income doesn’t allow such flexibility. Losses from online games cannot be adjusted against winnings or any other income, and they also cannot be carried forward to future years. The ITR filing system itself restricts negative figures in the “online gaming” section — only positive net winnings are recognised for taxation.
TDS Rules and Net Winnings
Platforms themselves are tasked with deducting tax at source (TDS). Section 194BA, read with Rule 133 of the Income-tax Rules, defines “net winnings” as withdrawals plus the closing balance, reduced by the opening balance and any non-taxable deposits. This ensures that gaming companies deduct tax before players even see their money.
Legal Obligations and Penalties
Failing to report gaming income can result in notices from the tax department. In extreme cases of deliberate concealment, prosecution is possible under provisions such as Section 139(1), Section 142(1), or Section 148. That said, prosecution is not automatic, it is applied only in proven cases of wilful default.
Even a small win, like Rs 10, is technically taxable. While such amounts may not trigger interest or penalties if TDS has already been deducted, the law is clear: reporting all winnings in the ITR is the correct way to stay compliant.
When ITR Filing Becomes Compulsory
Another important point — Rule 12BA of the Income Tax Rules, 1962 makes ITR filing mandatory if aggregate TDS or TCS in a financial year exceeds Rs 25,000. This condition applies even if your overall income is below the normal exemption threshold of Rs 2.5 lakh.
The tax regime for online gaming is strict and comprehensive. Even winnings as small as Rs 10 are chargeable to tax and must be disclosed under the head ‘Income from Other Sources’. Filing your ITR correctly ensures compliance, avoids future disputes, and keeps you on the right side of the law.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
Read More
