What the courts have decided on section 194BA, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Arakere Channappa Vishwanath v ITO
ITATHelps taxpayerNo later treatment found
The Assessing Officer has taxed the gross winnings figure the online gaming platform reported for me, refusing to look at my buy-ins because s.58(4) allows no deduction. My buy-ins actually exceeded my winnings. Is that assessment sustainable?
No. The Bangalore Bench held that s.58(4) operates only after there is income by way of winnings; it does not authorise the Department to treat gross wallet credits or recycled gaming funds as income in the first place. Since the very information obtained from the platform showed buy-ins of Rs 2,61,51,624 against gross winnings of Rs 2,33,52,271 — a net loss — there was no taxable income under s.115BB and the whole addition was deleted.
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Statutory position — s.194B: winnings from lottery, crossword puzzle, card games, gambling and betting, and the move to a per-transaction threshold
CBDT Circulars & InstructionsCuts both ways
The lottery agent deducted tax on a five thousand rupee prize because my winnings for the year crossed ten thousand. Was he right, and does it depend on which year the prize was paid?
It depends entirely on the year. As s.194B stands from 1 April 2025, the threshold is ten thousand rupees in respect of a SINGLE TRANSACTION: the words 'or the aggregate of amounts' were substituted by 'in respect of a single transaction', and the words 'during the financial year' were omitted, both by Act No. 7 of 2025 with effect from 1 April 2025. Immediately before that the section worked on the amount or the aggregate of amounts exceeding ten thousand rupees during the financial year, so a payer had to add up a claimant's winnings across the year; and where the winning is wholly or partly in kind and the cash part is not enough to meet the tax, the payer must, before releasing the winnings, ensure that tax has been paid.
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CBDT Circular No. 5 of 2023 (online gaming TDS)
CBDT Circulars & InstructionsCuts both ways
The platform says it need not deduct on every small withdrawal, and that my bonus counts as a deposit. Where does that come from?
It comes from this circular, issued under s.194BA(3) on the same day Rule 133 was notified. It allows the deductor to skip deduction on a withdrawal where the net winnings in it do not exceed Rs 100 in a month, provided the tax is picked up later and the deductor stands behind it; it treats a bonus, referral bonus or incentive as a taxable deposit, unless it is credited only for playing and cannot be withdrawn; it requires every user account of the same user on a platform to be aggregated; and it fixes how winnings in kind are valued, excluding GST.
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Statutory position — s.194BA: winnings from online games, net winnings, and where s.194B stops
CBDT Circulars & InstructionsCuts both ways
The gaming platform deducted tax on my gross winnings from each game. Should it have been deducting on net winnings under s.194BA instead, and from when?
Section 194BA was inserted by the Finance Act, 2023 with effect from 1 April 2023 and, notwithstanding anything contained in any other provision of the Act, requires a person paying income by way of winnings from any online game during the financial year to deduct tax on the NET WINNINGS in the payee's user account, computed in the manner prescribed, at the end of the financial year at the rates in force. Where there is a withdrawal from the user account during the year, deduction is at the time of withdrawal on the net winnings comprised in that withdrawal, as well as on the remaining net winnings in the user account computed in the prescribed manner at the end of the year — and from the same date the second proviso to s.194B takes online-game winnings out of s.194B altogether.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
