Section 194BA: TDS on Winning from Online Games and its Taxability

Section 194 BA has been inserted by the Finance Act, 2023, w.e.f. 1-4-2023 which deals with the TDS on Winning from Online Games which may be read as follows:

Any person responsible for paying to any person any income by way of winnings from any online game during the financial year shall deduct income-tax on the net winnings in his user account, computed in the manner as may be prescribed, at the end of the financial year at the rates in force:

Provided that in a case where there is a withdrawal from user account during the financial year, the income-tax shall be deducted 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 in the manner as may be prescribed, at the end of the financial year.

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.

Interpretation: 

Net Winning Amount = Winning Amount less Entry fees if any

if Amount is withdrawn whether fully or partially from the user account by the user then TDS will be deducted on whole amount at the time of withdrawal otherwise TDS will be deducted at the yead of the financial year.

Rate of the TDS will be 30% 

Further as per Section 115BBJ online game is taxable @30%

TDS on Winning from Online Games section 194BA