File ITR for gaming income before September 15.

The Centre’s recent ban on online paid games, citing addiction and financial risks, has disrupted platforms like fantasy cricket, rummy, and poker. While the industry reels from the move, individuals who earned winnings from such

games in FY25 must still report their income before the September 15 income tax return (ITR) deadline.

Income from online gaming does not fall under salary, house property, capital gains, or business income. Instead, it is classified under ‘Income from Other Sources’, a residual category that also includes items like lottery winnings, gifts, and interest on enhanced compensation, according to the Central Board of Direct Taxation (CBDT).

Tax treatment of gaming income

Flat tax rate: Section 115BBJ of

the Income-tax Act, 1961 prescribes a special tax rate of 30% on net winnings from online games, plus surcharge and cess.

No deductions or rebates: The basic exemption limit, standard deduction, and rebates are not available.

Losses not allowed: Losses from gaming cannot be adjusted against other income or carried forward. The ITR utility itself does not permit negative figures in the dedicated gaming income field under Schedule OS.

Compliance requirements

Platforms are required under Section 194BA to

deduct tax at source (TDS) on both withdrawals and closing balances. These transactions are linked to the taxpayer’s PAN and reported directly to the Income Tax Department.

This means that even if a person’s overall income is below the threshold, they may still need to file an ITR.

Rule 12BA of the Income-tax Rules, 1962 makes return filing compulsory where aggregate TDS or TCS in a financial year exceeds ₹25,000.

Sandeep Sehgal, Partner- Tax, AKM Global, highlighted, “Individuals earning money from online

gaming platforms, such as fantasy sports, e-sports, poker, and similar games, must file their ITR by reporting such income under ‘Income from Other Sources’. Online gaming income is taxed at a flat rate of 30%, without the benefit of the basic exemption limit, or any standard deductions or rebates under the Act. Furthermore, losses from online gaming cannot be set off against other income, nor can they be carried forward to future years.”

He advised taxpayers to choose the right form—ITR-2 or ITR-3

depending on their profile—and disclose all winnings, even when TDS has already been deducted. Non-disclosure, he cautioned, can attract notices from the tax department.

With the deadline just days away, individuals who have earned any winnings from online games in FY25 must ensure accurate reporting and timely filing to stay compliant.

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