Income Tax

Tax on Online Gaming Winnings: Section 115BB, TDS Under 194BA & Why There's No Basic Exemption

CA Nikhil Gupta·June 2026·6 min readTDS GUIDE

Reviewed by CA Nikhil Gupta · Last reviewed 17 June 2026

Winning ₹50,000 on a fantasy sports app doesn't mean you keep ₹50,000 — and it doesn't matter if your total annual income is below the basic exemption limit. Winnings from online games, lotteries, betting and similar activities are taxed under a special regime with a flat 30% rate, no basic exemption, no deductions, and mandatory TDS. Here's exactly how it works.

Section 115BB: Flat 30% Tax, No Exceptions

Section 115BB taxes income from winnings from any lottery, crossword puzzle, card game, gambling, betting, or any other game of any sort (including online games) at a flat rate of 30% (plus applicable surcharge and 4% health & education cess, taking the effective rate to roughly 31.2% or higher with surcharge for high earners).

⚠ This 30% rate applies REGARDLESS of your total income or tax slab. Even if your total annual income (excluding the winnings) is below the basic exemption limit (e.g., a student or homemaker with no other income), winnings taxed under Section 115BB are still taxed at 30% — the basic exemption limit and slab benefits do NOT apply to this category of income, and the Section 87A rebate is also not available against tax on such winnings.

No Deductions, No Set-Off

Unlike business income or capital gains, income taxable under Section 115BB cannot be reduced by:

Any expenditure incurred to earn the winnings (e.g., entry fees paid for games you DIDN'T win, or losses on other games/bets)
Any deductions under Chapter VI-A (80C, 80D, etc.)
Losses from any other head of income (no set-off allowed against winnings)

The full amount of winnings is taxed at 30%, period.

Section 194BA: TDS on Online Gaming Winnings

Introduced specifically for online gaming platforms, Section 194BA requires the platform to deduct TDS at 30% on net winnings from online games. Key features:

TDS is deducted at the time of withdrawal from the user's account, and also at the end of the financial year on any remaining net winnings not withdrawn
'Net winnings' is computed considering the net amount in the user account at the relevant point, factoring in deposits and withdrawals during the year — the exact computation methodology is prescribed and can get complex with multiple deposits/withdrawals across the year
There is no minimum threshold for TDS under 194BA — unlike Section 194B (lotteries, ₹10,000 threshold) or 194BB (horse racing, ₹10,000 threshold), 194BA applies on net winnings regardless of amount

Comparison: 194B / 194BB vs 194BA

Section	Applies To	TDS Threshold	TDS Rate
Legacy 194B; current section 393(3), Table Sl. No. 1	Lottery, crossword puzzle, covered card/other-game winnings; distinguish online net winnings	Winnings exceeding ₹10,000 in a single transaction, from 1 April 2025; not an annual aggregate test	30% normal withholding rate; separate from final-tax cess/surcharge
194BB	Winnings from horse races	Above ₹10,000	30%
194BA	Online games (net winnings)	No minimum threshold	30%

Reporting Winnings in Your ITR

Winnings taxable under Section 115BB must be reported under the head 'Income from Other Sources' in your ITR, in the specific schedule for income chargeable at special rates (Schedule SI). TDS deducted by the platform (reflected in Form 26AS/AIS) can be claimed as a credit against this 30% tax liability.

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What About Losses on Other Games/Bets?

If you lost money on other games or bets during the year, these losses CANNOT be set off against your winnings from a different game under Section 115BB — each game/transaction's winnings are taxed in isolation; there's no netting of overall wins and losses across different games or platforms for tax purposes.

Frequently Asked Questions

I won ₹5,000 on an online game — is it too small to be taxed? ▼

There is no minimum threshold for taxability under Section 115BB — even small winnings are technically taxable at 30%. However, TDS under Section 194BA applies to NET winnings without a minimum threshold either, so for small amounts, the platform may or may not deduct TDS depending on your account's net position (deposits vs withdrawals vs balance). Regardless of whether TDS was deducted, you are required to report all winnings as income under 'Income from Other Sources' taxed at 30% under Section 115BB when filing your ITR.

Can I reduce my taxable winnings by the entry fees I paid for games I lost? ▼

No. Income taxable under Section 115BB (winnings from lotteries, games, betting, etc.) does not allow any deduction for expenses incurred to earn such income — this includes entry fees for games you lost, or any other related expenditure. The gross amount of winnings (or net winnings as computed under Section 194BA for online games) is taxed at the flat 30% rate without any deductions.

My total income (salary + winnings) is below ₹7 lakh, which is covered by the Section 87A rebate under the new regime — does that mean I pay no tax on my winnings either? ▼

No. The Section 87A rebate does NOT apply to income taxable under special rates, including winnings under Section 115BB. Even if your overall income is within the 87A rebate threshold (making your regular slab-rate income tax-free), the 30% tax on winnings from lottery/gaming/betting under Section 115BB is still payable in full — this portion of your tax liability is not covered by the 87A rebate.

Source and review trail

Use the current official instrument, portal or regulator publication before acting.

Primary category: Income Tax
Official starting point: www.incometax.gov.in

Primary sources & related provisions

Statutory provisions referenced in this guide:

Section 393 (Tax to be deducted at source; earlier Section 195) - Income-tax Act