New Income Tax Bill Clarifies Online Gaming Winnings Taxation

The 2025 Income Tax Bill targets online gaming winnings with a clear definition. Set for a February 13 introduction, the bill defines ‘online game’ as any internet-based game accessible via computers or telecom devices. Previously, the 1961 Income Tax Act grouped online gaming under lotteries and gambling. This new bill distinctly defines ‘online game’ and streamlines the tax process.

A 30% tax rate on net winnings remains, with TDS applicable on amounts exceeding Rs 10,000 per transaction. Online gaming companies or intermediaries must deduct and deposit TDS when crediting winnings to players’ accounts or making payments. The bill prohibits deductions for expenses or allowances in calculating income from online gaming winnings. Losses from online gaming cannot offset other income or be carried forward, ensuring all winnings are fully taxed.