Online Gaming Income In FY25: Tax Rate, TDS Rules, And Reporting In ITR Explained

The Promotion and Regulation of Online Gaming Bill 2025 has been passed by both houses of Parliament. This paves the way for a ban on all money-based online games in India. Cleared in the Rajya Sabha on Aug. 21, the Bill also seeks to promote eSports and casual, non-money gaming.

If you have earned or lost money through online gaming in FY25, remember to report it while filing your income tax return (ITR). As per the existing income tax laws, winnings from online games need to be reported under the ‘income from other sources’ section while filing the ITR.

This is a residuary head of the Income-tax Act, 1961, for earnings not falling under salary, property, business, or capital gains. Some examples include lottery receipts, cash prizes and interest on wages. The money won from online games also comes under this umbrella.

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How Are Earnings From Online Gaming Taxed?

The earnings from online gaming and similar sources are assessed as per the provisions under Sections 115BBJ and 194BA of the I-T Act. According to Section 115BBJ, net winnings from online games are taxed at a flat rate of 30%. Contrary to all other types of income, this rate applies directly without allowing the benefit of normal deductions or exemptions.

Simultaneously, Section 194BA provides the guidelines for deduction of tax at source (TDS). According to this section, operators of gaming platforms are required to deduct a 30% TDS from the amount of net winnings credited to a user account at the end of the financial year.

This deduction is also shown in Form 26AS, a statement of all the tax-related information associated with the PAN of the taxpayer. At the time of filing the return, any already deducted TDS is offset against the total liability. Taxpayers will have to ensure that such information is properly recorded under the Schedule TDS area of their ITR forms.

Notably, losses incurred on some games can also be adjusted against the income from online gaming. The Promotion and Regulation of Online Gaming Bill, 2025, effectively prohibits the operation, promotion and advertising of money gaming websites in the country.

For taxpayers, however, the priority should be compliance. All online gaming income from FY 2024-25 has to be reported while filing ITR to avoid any notice from the I-T Department later.

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