What is TDS?
Tax Deducted at Source (TDS) is a tax collection mechanism implemented by the Government of India to collect taxes at the source of income generation. It is a form of indirect tax collection, where the payer deducts a certain percentage of the amount payable as tax and deposits it with the government on behalf of the payee. This system helps ensure regular and timely collection of taxes and reduces tax evasion.
TDS on Fantasy Gaming Apps
TDS was deducted on the user's winnings of Rs. 10,000/- and above until March 31, 2023. Starting April 1, 2023, new TDS rules have been implemented with the following changes:
- TDS will be deducted on the user's withdrawal amount, not on the user's pot winning amount.
- The withdrawal amount will be subject to 30% TDS, calculated on the user's net winnings. This means the user will receive the winning amount in the Winnings, and TDS will only be deducted when the user withdraws.
- User's Net Winnings from April to March will be calculated based on the following transactions:
-
- User's total winnings
- User's total deposits
- Amount withdrawn by the user to date
- TDS paid by the user to date
- User's total outstanding amount in the Winnings as of March 31 of the Financial Year. In this case, the user's current balance as of March 31 of that year will be subject to TDS, and the remaining balance will be carried forward to the next Financial Year.
TDS Calculation
The TDS will be charged on Net Winnings, the formula for which will be:
Net Winnings = Total Withdrawals (made in the FY including the current withdrawal transaction amount) - Total Deposits (made in the FY) - Opening balance as on 1st April 2023 (Deposit + Winning) - Amount on which TDS has been deducted w.e.f. 1st April 2023.
Illustrations
Case 1: When User's Net Winnings are More than Rs. 0
Assumption: User's opening balance on 1st April 2023 is Rs. 0 and no TDS has been deducted to date since 1 April 2023.
Case 1
| Wallet Category |
Amount (in Rs) |
| Withdrawals Made in the Current FY (A) |
3000 |
| Deposits Made in the Current FY (B) |
4000 |
| Current Withdrawal (C) |
7000 |
| Net Winnings (D = A + C - B) |
6000 |
| TDS to be deducted on (E = 30% of D) |
1800 |
| Amount to be credited to the Bank Account (F = D - E) |
4200 |
Case 2: When User's Net Winnings Equal to Rs. 0
Assumption: User's opening balance on 1st April 2023 is Rs. 0 and no TDS has been deducted to date since 1 April 2023.
Case 2
| Wallet Category |
Amount (in Rs) |
| Withdrawals Made in the Current FY (A) |
2000 |
| Deposits Made in the Current FY (B) |
5000 |
| Current Withdrawal (C) |
3000 |
| Net Winnings (D = A + C - B) |
0 |
| TDS to be deducted on (E = 30% of D) |
0 |
| Amount to be credited to the Bank Account (F = C - E) |
3000 |
Case 3: When TDS has been paid in the FY
Assume, the user has already paid a TDS of Rs. 4000 on the net winnings of Rs. 13,333 in the current FY.
Case 3
| Wallet Category |
Amount (in Rs) |
| Withdrawals Made in the Current FY (A) |
7000 |
| Deposits Made in the Current FY (B) |
7000 |
| TDS Paid to Date (C) (TDS of Rs. 4000 paid on the Net Winnings amount of Rs. 13,333) |
4000 |
| Withdrawal Made (D) |
1000 |
| Net Winnings (E = A + D - B) |
1000 |
| Applicable TDS on Net Winnings (when E < Rs. 10,000) |
0 |
Since Net Winnings up to Rs. 10,000 have already been taxed, no TDS will be deducted from the User's Net Winnings till it becomes greater than Rs. 10,000.
Case 4: When User's Net Winnings Have Reduced after TDS Payment
Assume, the user has already paid a TDS of Rs. 2700 on the Net Winnings of Rs. 9000 in the current FY. After paying the TDS of Rs. 2700, the user has made a deposit of Rs. 1500.
Case 4
| Wallet Category |
Amount (in Rs) |
| Withdrawals Made in the Current FY (A) |
15000 |
| Deposits Made in the Current FY (B) |
7000 |
| Net Winnings (C = A - B) |
8000 |
| TDS Paid (D = 30% of C) |
2700 |
| Deposit Made (E) |
1500 |
| New Net Winnings (F = C - E) |
6500 |
| TDS To be Paid (G) |
0 |
In this case, the user's net winnings have reduced from Rs. 9000 to Rs. 6500. Since the user has already paid a TDS of Rs. 2700, and the applicable TDS on Rs. 6500 (new net winnings) is Rs. 1950. Thus, the user can claim a refund of the excess TDS paid while filing the annual income tax.
Case 5: When the User has Balance in the Winnings at the End of the FY
Assume, the user has already paid a TDS of Rs. 3600 on the net winnings of Rs. 12,000 in the current FY and the user has a closing balance of Rs. 15,000 in his winnings on 31st March 2024.
Case 5
| Wallet Category |
Amount (in Rs) |
| Withdrawals Made in the Current FY (A) |
8000 |
| Deposits Made in the Current FY (B) |
8000 |
| TDS Paid till Date (C) (TDS of Rs. 3600 paid on the Net Winnings amount of Rs. 12,000) |
3600 |
| Winnings Balance on 31 March (end of FY) (D) |
15000 |
Here, a TDS has already been paid on the Net Winnings of Rs. 12,000. Thus, the TDS calculation at the end of the FY will look like:
| Wallet Category |
Amount (in Rs) |
| Withdrawals Made in the Current FY (A + D) |
23000 |
| Deposits Made in the Current FY (B) |
8000 |
| TDS Paid till Date (C) (TDS of Rs. 3600 paid on the Net Winnings amount of Rs. 12,000) |
3600 |
| Net Winnings at the End of FY (E = A + D - B) |
15000 |
| Applicable TDS (F = 30% of E) |
4500 |
| Actual TDS to be Paid (G = F - C) |
900 |
| Amount in Winnings at the End of FY (H = E - G) |
14100 |
Thus, the amount of Rs. 14,100 will be carried forward to the next FY. The amount thus carried forward to the next FY will not be considered for TDS calculation in the new FY.
This policy ensures that TDS is applied fairly and accurately, adhering to the latest government regulations, and provides clarity to users regarding their tax liabilities and deductions on HotSports.