How to file ITR for your online gaming income before the FY 2024-25 deadline

When filing income tax return, all money earned from online gambling is treated as "Income from Other Sources." The Income-tax Act's Sections 115BBJ and 194BA apply to income earned on different gaming platforms.

Under Section 115 BBJ, income tax would be charged on net profits for the previous fiscal year at a flat rate of 30%.

Section 194BA mainly deals with TDS on net wins in the user's gaming account at the end of the fiscal year.

Therefore, at the end of a fiscal year, you would pay 30% tax on your net earnings from online gaming platforms. For this type of income, no person is eligible for a rebate under section 87A and a deduction under sections 80C to 80U.

Suppose you paid ₹2,000 as an entry fee to participate in an online game and won ₹50,000.

Net winnings = ₹50,000 - ₹2,000 = ₹48,000

TDS at 30% on ₹48,000 = ₹14,400

So, the gaming platform will deduct ₹14,400 as TDS and deposit it with the government.

You will receive the remaining amount ₹ 35,600. (₹50,000 - ₹14,400 = ₹35,600)

Here is how you can file income tax returns for income from online gaming for FY 2024-2025

In general, one might seriously believe the procedure of filing tax returns for gaming income is very complicated; however, it is quite straightforward if one undertakes the right steps. Anything won from games online, including fantasy sports, e-sports, or poker, is fully taxable under the head "Income from Other Sources."

"File your return through the prescribed ITR form applicable to you (generally, ITR-2 or ITR-3 depending on your other income) and ensure the accuracy in your return filing as the income tax department cross-verifies it with the data available with the respective platforms," explained CA Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara Pvt. Ltd.

• Winnings from online games should be reported under the ‘Income from Other Sources’ section in your Income Tax Return (ITR).

• If TDS has been deducted, it will be visible in your Form 26AS (through Form 16A) and should be included in the Schedule TDS section of your ITR.

• If you have had any losses from online gaming, you can adjust them against your gaming income while filing your return.

"To file your return, collect all payout statements and TDS certificates issued by the gaming platforms. Report the winnings in gross amount and not the net payout, along with the disclosures of TDS already deducted," said CA Siddharth Maurya.

Online money games are played by depositing money in expectation of winning monetary and other rewards. According to the bill, anyone who violates the rules by providing an online money gambling service might be imprisoned for up to three years, fined up to ₹1 crore, or both. Additionally, those who engage in advertisements in violation of the guidelines face a maximum penalty of two years in prison, a fine of up to ₹ 50 lakh, or both.