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Gaming firms hail CBDT's online gaming TDS clarifications on bonuses & sops

TDS not to apply if bonuses are used only for playing, or if net winnings do not exceed Rs 100 a month, or if balance in the user account is not sufficient to discharge tax deduction

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5 min read Last Updated : May 23 2023 | 8:00 PM IST

The recent clarifications on the taxation of bonuses and incentives received from online games, issued by the Central Board of Direct Taxes (CBDT) on Monday, have been welcomed by the industry, which says the move will provide a fillip to the burgeoning $2.2 billion Indian gaming sector.

The apex tax body clarified that any deposit in the form of bonus or incentives credited into a ‘user account’ will be regarded as net winnings, and subject to tax deduction when withdrawn. Money equivalent deposits in the form of coins, coupons and vouchers will also be deemed taxable.

Tax deducted at source (TDS) will not apply if the said bonuses are used only for playing. Tax will also not be deducted in case net winnings do not exceed Rs 100 a month, or if the balance in the user account, at the time of tax deduction, is not sufficient to discharge the tax deduction.