Help - TDS Policy On Winnings

The Finance Bill 2023, introduced by the government of India, includes a significant provision regarding the taxation of winnings from online gaming. The change is about the tax on winnings from playing online. No matter how much money you win or where you live, you have to pay a 30% tax.

Tax Liability on Winning

Under Finance Bill 2023, individuals who win money from online games are liable to pay a 30% tax on their winnings. Unlike previous regulations, there is no minimum threshold limit for this tax. Even if you win a relatively small amount, you still need to pay tax.

Mandatory Deduction of Tax

To ensure everyone pays their fair share of taxes, including winners on online gaming platforms. So, they've made a rule that says the platform operators have to deduct a certain amount of tax directly from the winnings. This is Tax Deducted at Source (TDS).

If you win some money while playing online, the platform operator will take care of it. They'll deduct 30% of your winnings and send it to the government.

Remember, this rule applies to all winnings, big or small. The goal is to ensure everyone contributes their fair share to the country's tax collection.

Implications and Fairness

These new provisions aim to ensure the government receives its rightful share of tax revenue from winnings generated through online gaming. Furthermore, the regulations create a level playing field for all online gaming platform operators, who will now be subject to the same tax rules.

What does the law say on winnings over a real money gaming app in India?

Winnings from online gaming apps are subject to a 30% tax per the Finance Bill, 2023. Also, this tax applies to residents and non-residents, and there is no minimum limit for its applicability.

TDS

Operators of these gaming apps must deduct a 30% tax at source (TDS) on all winnings, regardless of the amount.

Exemptions

Some exemptions exist for the tax on winnings. These include winnings from skill-based games that are not considered gambling, winnings in the form of non-monetary prizes, and winnings from games played by individuals below 18 years of age.

Important points to remember

The tax is the responsibility of the winner, not the app operator.

App operators must keep records of all winnings and provide them to winners upon request.

Winners must file a tax return if their winnings exceed a certain threshold.

It's crucial to stay updated on any changes in the law regarding real money gaming apps in India.

To calculate net winnings in rupees, let's look at a scenario using the Tripsy Games TDS Policy.

1. Carryover deposits from last year

Suppose you have a balance of ₹10,000 in your account on 25th March 2023, and you decide to withdraw it on 5th April 2023.

Here's how the calculation works:

In this case, since your net winnings are ₹0, no TDS will be applicable.

2. Net winnings less than ₹10,000

TDS is not applicable if your net winnings are less than or equal to ₹0.

Let's assume you have a year opening balance of ₹3,000 as of 1st April 2023 and deposited ₹7,000 on 2nd April 2023.

Here's how the calculation works:

If you withdraw ₹5,000 on 3rd April 2023, here's how the TDS calculation works:

No TDS will be applied in this case, as the net winnings are negative.

3. TDS on net winnings at 30%

If your net winnings (including the withdrawal amount) are more than 0, then 30% TDS will apply to the net winnings at the time of withdrawal.

Let's assume in a financial year, you deposited a total of ₹7,000 and had an opening balance of ₹3,000.

In the same financial year, you made a withdrawal of ₹5,000, and on 30th April 2023, you wanted to withdraw an additional ₹7,000. So, your total withdrawals would be ₹12,000 (₹5,000 + ₹7,000).

In this case, on your withdrawal request of ₹7,000, TDS will be applied to the net winnings (A - B) of ₹2,000 (₹12,000 - ₹10,000) at the rate of 30%. However, no TDS will be applied to the remaining balance of ₹5,000. After deducting ₹600 TDS, ₹6,400 will be credited to your bank account.

These are a few scenarios to understand how the TDS Policy for net winnings is applied on the Tripsygames.com platform. It's important to note that the TDS Policy may be subject to change based on applicable laws, so it's essential to stay updated.

The tax calculation on net winnings is as follows:

1. Net winnings are calculated by subtracting total deposits from total withdrawals in a financial year.

Net Winnings = Total Withdrawals - Total Deposits

2. TDS (Tax Deducted at Source) of 30% is applicable on net winnings at the time of withdrawal and also at the end of the financial year.

Let's go through some scenarios to understand how the tax is calculated:

Scenario 1:

Carryover deposits from last year

If you have a balance of ₹10,000 as the opening balance at the start of the financial year and withdraw it without any additional winnings, no TDS is applicable because your net winnings are ₹0.

Scenario 2:

Net winnings less than ₹10,000

If your net winnings are negative or zero, no TDS is applicable.

Scenario 3:

TDS on net winnings at 30%

If your net winnings are positive, a TDS of 30% will be applied to the net winnings at the time of withdrawal.

Scenario 4:

TDS on incremental withdrawals

If TDS has been applied to previous withdrawals, further TDS is applicable once your net winnings exceed the amount on which you have already paid TDS.

Scenario 5:

Claiming TDS Refunds

If you have paid TDS on initial winnings during the financial year, but your net winnings have reduced subsequently, you can claim a refund of the excess TDS during your annual income tax filing.

Scenario 6:

Carryover amount to the next financial year

If you have a balance in your account at the end of the financial year, TDS will be applied to that amount as if it were a withdrawal for the year. The remaining amount will be carried forward as the opening balance for the next year.

Please note that the above calculations are based on understanding the provisions introduced or amended by the Finance Act, 2023. The TDS policy may be subject to change based on applicable laws. It is advisable to consult with a tax advisor for personalised guidance and to stay updated on the latest regulations.

Here are the key points about tax deductions on various events related to the Tripsy Games platform:

• - Tax Deduction at Source (TDS) is applicable when withdrawing funds and at the end of the financial year.
• - A 30% TDS is applied to net winnings during withdrawals and at the end of the financial year.
• - Net winnings are calculated by subtracting total deposits from total withdrawals in a financial year.
• - Any net winnings previously subjected to TDS will be considered when calculating net winnings during subsequent withdrawals.
• - The TDS Policy is based on the current understanding of the law, and the company reserves the right to modify it as per applicable regulations.
• - Several scenarios explain the application of the TDS Policy, including carryover deposits, net winnings below a certain threshold, TDS on net winnings at 30%, TDS on incremental withdrawals, claiming TDS refunds, and carrying-over amounts to the next financial year.
• - Amounts remaining in the account at the end of the financial year may be subject to TDS if considered as a withdrawal, while the remaining balance carries over to the next year.
• - Amounts on the table at the end of the financial year are not considered for the opening balance in the following year.

If your net winnings decrease by the end of the financial year, you may be eligible for a refund of the tax deducted. 

To claim the refund, you can include it in your Income Tax Return (ITR) at the time of tax submission.

Let's say you had total withdrawals of ₹20,000 and total deposits of ₹14,000 during the financial year. This resulted in net winnings of ₹6,000, on which a TDS of ₹1,800 was deducted.

However, later on, your net winnings decrease to ₹0. In this case, if you withdraw up to ₹6,000, no further TDS is applicable as you have already paid tax on the net winnings. The full withdrawal amount of ₹6,000 will be credited to your bank account.

If, on the other hand, you withdraw ₹10,000, TDS will be applicable only on the net winnings of ₹4,000 (₹10,000 - ₹6,000). So, a TDS of ₹1,200 will be deducted, and the remaining amount of ₹8,800 will be credited to your bank account.

In the scenario where you have paid TDS on initial winnings during the financial year, but your net winnings decrease subsequently, you can claim a refund for the excess TDS during your annual income tax filing, subject to applicable law.

Any balance in your account at the end of the financial year will be subject to TDS. Any unused funds will roll over as the starting balance for the next year, and any withdrawals from this balance in the following year will not be subject to TDS.

Yes, you will get a TDS certificate from Tripsy Games platforms. Per the Finance Bill 2023, operators of real money gaming apps must deduct tax at source (TDS) on winnings. The TDS rate is 30%, which will apply to all winnings, regardless of the amount.

Tripsy Games is a responsible gaming operator, and they are committed to complying with all applicable laws and regulations. They will issue a TDS certificate to all winners with tax deducted at source. The TDS certificate will contain the following information:

The TDS certificate will be issued in the name of the winner and it will be a valuable document for tax purposes. The winner can use the TDS certificate to claim a deduction for the tax paid on their winnings.

You can request a TDS certificate from Tripsy Games by contacting our customer support team. We will be able to provide you with the necessary information and documentation to obtain a TDS certificate.

Scenario 1

Carryover deposits from last year

If you have a balance of ₹10,000 in your account on 25 Mar 2023 and withdraw it on 5 Apr 2023, no TDS will be applicable as your net winnings are ₹0.

Scenario 2

Net winnings less than ₹10,000

TDS is not applicable if your net winnings are less than or equal to ₹0.

Scenario 3

TDS on Net winnings at 30%

If your net winnings (including the withdrawal amount) are more than 0, then 30% TDS will apply to the net winnings at the time of withdrawal.

Scenario 4

TDS on incremental Withdrawals

If TDS has been applied to your previous withdrawals, then no TDS is applicable on withdrawals until your net winnings exceed the amount for which you have already paid TDS.

Scenario 5

Claiming TDS Refunds

If you have paid TDS on initial winnings during the financial year, but your net winnings have reduced subsequently, you may be eligible to claim a refund of the excess TDS during your annual income tax filing.

Scenario 6

Carryover amount to the next Financial Year

At the end of the financial year, if you have some amount lying in your wallet (excluding the amount on the table), TDS will be applied to that amount by considering it as a withdrawal for the financial year. 

The remaining amount will be carried forward to the next year as an opening balance. Also, withdrawal from the opening balance will not be subjected to TDS in the next year.

Note: The TDS policy may be subject to modifications or changes based on the applicable laws at the relevant time.