The excitement of winning money on popular platforms like Dream11, Rummy, or other online gaming apps often overshadows the tax responsibility that comes with it. However, the Income Tax Department has made it clear that these winnings must be reported while filing your income tax return. Unlike other sources of income, online gaming income is taxed under a separate provision and attracts a flat 30 percent levy, irrespective of the amount earned or your overall income bracket.
This means that even if your total annual income falls below the basic exemption limit, you still have to disclose your winnings from online games and pay the applicable tax. Losses from gaming cannot be adjusted against other sources of income, nor can deductions under existing tax laws be claimed to reduce this burden.
The rules have become stricter with President Droupadi Murmu recently signing the Online Gaming Bill into law. The legislation is aimed at curbing the social harms associated with money-based gaming, including financial exploitation and addiction. Alongside this, the Income Tax Act of 2025 has been given assent, which will come into effect from April next year. Together, these two developments mark a significant change in how gaming income will be regulated and taxed in the country.
What the Law Says
According to Section 115BBJ of the Income Tax Act, winnings from online games are subject to a flat 30 percent tax. This tax is calculated on the net winnings, which means your total earnings after deducting entry fees or stake amounts. Importantly, the law does not differentiate between the types of games, so whether it is fantasy cricket, poker, or a casual game of cards, the taxation remains the same.
The definition of an online game in the law is also broad. It covers any game that is accessible through the internet, whether via a mobile phone, laptop, or other digital device. This ensures that all digital gaming formats with monetary stakes fall under the same tax net.
What Changes Next Year
While the rules currently apply to net winnings, the new Income Tax Bill 2025 proposes to tighten the system further. The new clause suggests taxing gross winnings instead of net, meaning the total amount received will be taxed at 30 percent without adjusting for expenses. This change, while simplifying compliance, increases the taxable base and may further raise the tax burden on players.
At the same time, the Online Gaming Act has introduced an outright ban on real money gaming platforms, while keeping e-sports and social gaming outside its scope. This could shrink the number of taxable platforms in the future, but for now, those who have earned winnings in FY25 must report them in their ITRs accurately.
Why Reporting is Non-Negotiable
Failure to disclose gaming income can lead to tax notices, penalties, and even scrutiny of your financial activities. Since platforms are required to deduct tax at source (TDS) on winnings above a certain limit, any mismatch between what is reported by the platform and what you declare in your ITR can raise red flags.
With the government’s increased focus on transparency and digital monitoring, it has become nearly impossible to hide such income. For taxpayers, the safest and smartest approach is to comply with the law and report all winnings, no matter how small.
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