SECTION 194BA TDS ON WINNING FROM ONLINE GAMES
SECTION 194BA TDS ON WINNING FROM ONLINE GAMES
TDS U/S 194BA: TDS ON WINNINGS FROM ONLINE GAMES & ITS APPLICABILITY
- What do you mean by TDS?
TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.
TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.
The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.
The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.
Note: -
Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.
Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.
- What is TDS under Section 194BA of Income Tax Act?
Section 194BA of Income Tax Act, 1961 mandates that TDS to be deducted on income by way of winning from online games.
- What do you mean by net winnings for the purpose of TDS under this section?
Computation of net winnings for the purpose of TDS under this section: (A+D) – (B+C)
|
A |
Aggregate amount withdrawn from user account during the F.Y. |
|
B |
Closing balance of user account at the end of the F.Y. |
|
C |
Aggregate amount of non-taxable deposit made in use account by the assessee during the F.Y. |
|
D |
Opening balance of user account at the beginning of the F.Y. |
Example: -
Mr Sarthak is online fantasy game addict. He is having user account with Dream 11.
Opening Balance as on 01/04/2024: Rs. 70,000
Amount deposited during the P.Y 24-25 in user account- Rs. 1,60,000
Amount withdraw during the P.Y 24-25 from user account- Rs. 3,40,000
Closing balance as on 31/03/2025: Rs. 80,000
In this case for the purpose of TDS net winnings is Rs. (3,40,000+80,000) – (1,60,000+70,000) = Rs. 1,90,000.
- When is TDS to be deducted under Section 194BA?
TDS is to be deducted at the time of withdrawal during the P.Y from user accounts as well as at the end of Financial Year.
- Who is required to deducts TDS under Section 194BA?
Any person obligated to pay winnings from online games to any payee is liable to deduct TDS under Section 194BA.
- Rate of TDS under Section 194BA?
The TDS rate under this Section is 30% for residents & 31.2% (30% plus 4% surcharge) in case of non-resident.
Notes: -
- If the winning amount is wholly in kind or it is partly in kind & partly in cash and the cash balance is not sufficient to meet the TDS, then payer shall release the prize only after ensuring that tax on such winning is paid to the government.
Example: -
From following information calculate TDS required to be deducted by DREAM 11 from the winning of Mr Sarthak. Opening balance of DREAM 11 is Rs. 60,000 & closing balance of account is Rs. 72,000.
|
Deposits in User Account |
Withdrawal from User Account |
||||
|
DATE |
PARTICULAR |
AMOUNT |
DATE |
PARTICULAR |
AMOUNT |
|
14/04/2024 |
Transfer from Bank A/c |
50,000 |
30/04/2024 |
Transfer to Bank A/c |
80,000 |
|
19/05/2024 |
Transfer from Bank A/c |
70,000 |
19/07/2024 |
Transfer to Bank A/c |
92,000 |
|
13/06/2024 |
Bonus from DREAM 11 |
11,000 |
10/02/2025 |
Transfer to Bank A/c |
75,000 |
|
18/08/2024 |
Transfer from Bank A/c |
30,000 |
15/03/2025 |
Transfer to Bank A/c |
90,000 |
Before calculating TDS we need to understand how to calculate Net winnings at the First withdrawal, Subsequent withdrawals & Net winnings at the end of F.Y.
FIRST WITHDRAWAL: - A-(B+C)
|
A |
Amount withdrawn from user account |
|
B |
Aggregate amount of non-taxable deposit made till the time of withdrawal |
|
C |
Opening balance of user account. |
SUBSEQUENT WITHDRAWAL: - A-(B+C+E)
|
A |
Aggregate amount withdrawn from user account till the date of subsequent withdrawn. |
|
B |
Aggregate amount of non-taxable deposit made till the time of subsequent withdrawal |
|
C |
Opening balance of user account. |
|
E |
Net winnings on which TDS already deducted at the time of earlier withdrawal. |
Net winnings at the end of FY: - (A+D)-(B+C+E)
|
A |
Aggregate amount withdrawn from user account during the FY. |
|
D |
Closing balance of user account at the end of the FY. |
|
B |
Aggregate amount of non-taxable deposit made in user account by the assessee during the FY. |
|
C |
Opening balance of user account at the beginning of FY. |
|
E |
Net winning on which TDS already deducted at the time of withdrawal. |
Now we solve the above problem: -
|
30/04/2024 |
First withdrawal |
80,000 – (50,000 + 60,000) = Nil (no need to deduct TDS). |
|
19/07/2024 |
Subsequent withdrawal |
(80,000 + 92,000) – (50,000+70,000+60,000) = Nil (no need to deduct TDS). |
|
10/02/2025 |
Subsequent withdrawal |
(80,000 + 92,000 + 75,000) – (50,000 + 70,000 + 30,000 + 60,000) = 37,000 (TDS @ 30% to be deducted on 10/02/2025 & deposited before 07/03/2025). |
|
15/03/2025 |
Subsequent withdrawal |
(80,000 + 92,000 + 75,000 + 90,000) – (50,000 + 70,000 + 30,000 + 60,000 + 37,000) = 90,000 (TDS @ 30% to be deducted on 15/03/2025 & deposited before 30/04/2025). |
|
31/03/2025 |
End of the Year |
(80,000 + 92,000 + 75,000 + 90,000 + 72,000) – (50,000 + 70,000 + 30,000 + 60,000 + 37,000 + 90,000) = 72,000 (TDS @ 30% to be deducted on 15/03/2025 & deposited before 30/04/2025). |
- Exemption under Section 194BA?
In order to remove difficulty in deducting TDS for insignificant withdrawal, it is clarified that may not deducted on withdrawal on satisfaction of all the following conditions: -
- Net winnings comprised in the amount withdrawn does not exceed Rs. 100 in a month.
- The deductor undertakes responsibility of paying the difference if the balance in the user account at the time of tax deduction u/s 194BA is not sufficient to discharge the tax deduction liability conducted.
- Time limit for deposit of TDS under Section 194BA?
The due date for deposit of TDS is as below: -
|
Month |
Due Date |
|
April |
On or before 7th May. |
|
May |
On or before 7th June. |
|
June |
On or before 7th July. |
|
July |
On or before 7th August. |
|
August |
On or before 7th September. |
|
September |
On or before 7th October. |
|
October |
On or before 7th November. |
|
November |
On or before 7th December. |
|
December |
On or before 7th January. |
|
January |
On or before 7th February. |
|
February |
On or before 7th March. |
|
March |
On or before 30th April. |
- What is the due date for filing of TDS return under Section 194BA?
TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: -
|
Quarter |
Period |
Due date (TDS filing) |
|
1St quarter |
April-June |
31st July. |
|
2nd quarter |
July-September |
31st October. |
|
3rd quarter |
October- December |
31st January. |
|
4th quarter |
January- March |
31st May. |
- Type of TDS return & form to be issued?
TDS under this section has to filed quarterly through FORM 26Q and the deductor has to issue FORM 16A to the employee after filing of return.
- Fees/ Penalties for Late/ Non- Filing of TDS u/s 194BA?
Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.
|
Particulars |
Penalty |
|
TDS not deducted on time. |
1% per month or part of month. |
|
TDS deducted but not deposited before due date |
1.5% per month or part of month. |
|
TDS return not file on or before due date |
200 per day maximum till TDS amount. |
