Synopsis: With the government banning all money-based online games under the new Online Gaming Bill 2025, players must still disclose their winnings or losses from FY25 while filing income tax returns. Gaming income is fully taxable at a flat 30% rate, with no deductions allowed.
The Promotion and Regulation of Online Gaming Bill 2025, passed by both houses of Parliament and cleared in the Rajya Sabha on August 21, 2025, has effectively banned all forms of real money online gaming in India. While eSports and social (non-money) gaming will be promoted, the ban targets gambling-style and money-based platforms.
However, if you have earned or lost money through online gaming in FY25, you are required to report these details in your income tax return (ITR). The Income-tax Act treats such income as taxable under the head “Income from Other Sources.”
Tax Rules for Online Gaming Income
- Section 115BBJ – Net winnings from online games are taxed at a flat 30% rate.
- Section 194BA – Tax Deducted at Source (TDS) is applied to winnings in a user’s gaming account at the end of the financial year.
Important: No deductions under Sections 80C to 80U or rebate under Section 87A can be claimed on gaming income.
Example:
- Entry Fee Paid: ?2,000
- Winnings: ?50,000
- Net Winnings = ?48,000 (?50,000 - ?2,000)
- TDS @ 30% = ?14,400
- Final Payout = ?35,600
Filing ITR for Gaming Income
- Report winnings under “Income from Other Sources.”
- Use ITR-2 for most individuals (ITR-3 if business income is involved).
- Disclose gross winnings, not just the net payout.
- Match TDS details with Form 26AS and fill them in the Schedule TDS section.
- Collect payout statements and TDS certificates from the gaming platform.
- Losses from online gaming can be adjusted against winnings before reporting.
With the new law in force, this financial year marks the last time many players will report real money gaming earnings in their tax filings.
Disclaimer: This article is for informational purposes only. Taxpayers should consult a qualified tax advisor or chartered accountant for filing assistance and to ensure compliance with the latest Income Tax and Online Gaming laws.
