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New TDS rules for fantasy sports: Everything You Need To Know About

New TDS rules for fantasy sports

The Government of India imposed a revised rule in the Financial Budget 2023 in which 30% of TDS will be deducted from all the fantasy gaming users from their net winnings. These rules will impose a 30% tax on net winnings from online fantasy gaming platforms. The proposals were made in Finance Bill 2023 after Finance Minister Nirmala Sitharaman presented the Financial Budget for 2022-23. The revised rules were introduced in Finance Bill 2023.

The revised TDS rule for Fantasy Sports in India came into effect on 1st April 2023. This rule requires fantasy sports platforms to deduct Tax at Source (TDS) from users’ winnings. The TDS rate is 30%. The government has said that the new rule is aimed at bringing transparency and accountability to the fantasy sports industry. The government has also said that the new rule will curb tax evasion.

The revised rule applies to all fantasy gaming platforms in India. This means that all fantasy app users will now have to pay tax on their winnings, even if they are below the taxable income threshold. The government said that the rule would not have a significant impact on fantasy sports’ popularity. In this article, we will look at the revised TDS rule and explain how it works. We will also discuss some of the implications of the rule for fantasy sports players.

What is the updated TDS rule?

The revised TDS rule for fantasy gaming platforms was introduced in Budget 2023. The rule, which was effective April 1, 2023, requires all fantasy sports platforms to deduct 30% TDS on all winnings which also signifies that if you win a cash prize of Rs. 100 or more on a fantasy gaming platform like Dream11, MPL, My11Circle, etc. The platform will deduct Rs. 30 as TDS (30% of Rs. 100) from your winnings. The platform will then remit TDS to the government. With this system, now every fantasy platform user will liable to pay tax on every withdrawal.

Old TDS Policy

As per the old TDS policy before March 31, 2023, any winnings above Rs.9,999 were liable for TDS deduction. No TDS was levied on withdrawals below Rs. 10,000. For example, if a user wins Rs. 12,000 (which is above the Rs. 10,000 limit) in an online game, there will be a TDS of Rs. 3,600 (30% on Rs. 12,000), and the user will receive Rs.8,400 on withdrawal.

How does this revised TDS rule work?

The revised TDS rule will be implemented by all fantasy gaming platforms in India. Whenever a player wins a prize, the fantasy gaming platform automatically deducts TDS at 30% from players’ net winnings during the withdrawal process. Net winnings are calculated by deducting Entry Fees paid by players from the total winnings.

The TDS is to be deducted when crediting the winnings to the user’s bank account linked with the fantasy gaming platform. The revised TDS rule for fantasy sports is a significant change that will impact India’s players and fantasy sports platforms.

The user will be required to provide their PAN (Permanent Account Number) to the fantasy gaming platform for the TDS to be deducted. If the user fails to provide a PAN number, TDS will be deducted at a higher rate of 50%.

The revised TDS rule applies to all net winnings from fantasy gaming platforms. Net winnings are calculated by subtracting entry fees from total winnings. For example, if you enter a fantasy contest with an entry fee of Rs. 100 and win Rs. 200 then your net winnings would be Rs. 100 and you need to give 30% TDS on those Rs 100 means you will get Rs 70 in withdrawal and Rs 30 will goes into TDS.

All fantasy gaming users are subject to the new TDS rule, regardless of their income level or tax residency. So, all the fantasy sports users, who loves to play various games on the fantasy app, they’ve to pay 30% TDS in their net winnings and the amount will be deducted automatically by the fantasy platform while withdrawing your winnings balance.

The introduction of the revised TDS rule has received mixed reactions. Some players have expressed concerns that the rule will make fantasy gaming platforms less attractive and discourage participation. Others have argued that the rule is necessary to ensure that players pay their fair share of taxes. Some people have welcomed the rule, arguing that it will curb tax evasion and ensure that everyone pays their fair share of taxes.

Some Tips for Complying with the TDS Regulation –

Here are some tips for complying with the revised TDS rules –

  • Keep track of your winnings – You should keep track of all fantasy sports contests. This will help you calculate the amount of TDS you owe.
  • Provide your PAN Card to the fantasy sports platform – You’ll need to provide your PAN Card to the fantasy sports platform for them to deduct TDS from your net winnings.
  • Check your winnings statement – The fantasy sports platform should provide a winnings statement after each contest. This statement will show the amount of your net winnings and the amount of TDS deducted. 

Frequently Asked Questions (FAQ)

  1. How much tax will be deducted under the revised TDS policy?

As per the updated TDS policy issued by the government, a 30% TDS on net winnings will be deducted automatically upon withdrawal.

  1. Will every withdrawal attract 30% TDS?

No, with every withdrawal, your net winnings are calculated on the fantasy gaming platform and TDS is charged only on your net winnings.

  1. How can I reduce my tax liability on the fantasy platform?

Avoid doing multiple withdrawals on the fantasy sports app. Apart from that, try to accumulate winnings and withdraw them once a month.

  1. What if I pay extra TDS on the fantasy platform?

Since online gaming winnings are liable for 30% TDS, users must file their ITR. The total TDS deducted can be adjusted against the amount of winnings liable to tax. If any excess TDS is deducted, it can be claimed back while filing the ITR.

  1. What happens if I have net losses on the fantasy gaming platform?

No, TDS will be applicable by the fantasy gaming platform in case of net losses at the time of withdrawal or at the end of the fiscal year.

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