Understanding TDS Calculation for Online Winnings

The Finance Act of 2023 introduced a new Tax Deducted at Source (TDS) law, which has been in effect since 1 April 2023. Under this law, individuals are required to pay TDS on their taxable amount, also known as net winnings, when making withdrawals from online platforms.

The TDS rate applicable is 30% of the taxable amount.

If no withdrawal is made during the entire financial year, TDS will be deducted on the net winnings as of 31 March 2024.

Calculating the Taxable Amount (Net Winnings)

To determine the taxable amount (net winnings), different rules apply based on the time period:

Until 30 April 2023:

The taxable amount was calculated as follows:

Net winnings* = Total winnings - (Total Entry Amount - Cash Bonus/Discount)

(*subject to change as per the rules that are to be notified under the Income Tax 1961)

From 1 May 2023:

A simplified method is used to calculate the taxable amount:

The taxable amount is defined as the difference between the total withdrawals and deposits made within the financial year.

Example Calculation

Let’s consider an example to understand the TDS calculation:

In this example, the taxable amount (net winnings) would be the difference between the total withdrawals and deposits made by the individual in the financial year.

For more detailed examples and clarity on TDS calculation, you can refer to this link.

Additional Resources

If you need further information or a simplified version of these TDS changes, you can also refer to this Times Of India article.