If the winnings are received in kind, which is rare in the mobile gaming world, but quite common in other online/TV show gaming, then the tax rate will be applicable on the market value of the prize received in kind.

The reporting of such income earned will need to be done at the time of filing of the gamer’s tax returns as well. The gaming companies take the gamer’s PAN along with the bank account details, however, the gamer’s responsibility does not end with providing these details. Gamers should know that any winnings on which TDS has been deducted will still need to be disclosed in their income tax returns. No deduction or expenditure is allowed to be claimed against such income. This is a TDS provision laid down under section 194B and is applicable only if the winnings exceed ₹10,000. It is to be noted that the person paying out the prize money needs to deduct tax at source before distributing the winnings. The net rate after cess amounts to 31.2%, without the benefit of the basic exemption limit. Winnings from online gaming are taxed at a flat rate of 30%, excluding cess.

Earn money from online games