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Gaming firms hail CBDT's online gaming TDS clarifications on bonuses & sops

TDS not to apply if bonuses are used only for playing, or if net winnings do not exceed Rs 100 a month, or if balance in the user account is not sufficient to discharge tax deduction

Aryaman Gupta New Delhi

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4 min read Last Updated : May 23 2023 | 8:00 PM IST

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The recent clarifications for taxation on bonuses and incentives received from online games, issued by the Central Board of Direct Taxes (CBDT) on Monday, have been largely welcomed by industry stakeholders. They say it will give a fillip to the burgeoning $2.2-billion Indian online gaming industry.

The apex tax body clarified that any deposit in the form of a bonus or incentive credited to a ‘user account’ will be considered net winnings and will, therefore, be subject to tax deduction in case of withdrawal. Money-equivalent deposits in the form of coins, coupons, and vouchers will also be taxable.

Tax deducted at source (TDS) will not be applicable if said bonuses are used only for playing. Furthermore, tax will not be deducted in cases where net winnings do not exceed Rs 100 per month or if the balance in the user account at the time of tax deduction is not sufficient to discharge tax deduction.