Tax on Gambling Winnings in India: A Complete Guide (Updated 2025-26)

The Basic Rule: Gambling Winnings Are Taxable in India

Under Indian income tax law, money you win from gambling, betting, lotteries, card games, horse races, crossword puzzles, or any game of chance is treated as taxable income. It falls under the head “Income from Other Sources” in your income tax return.

The tax rate is a flat 30%, regardless of how much you earn from other sources. So even if your salary income is below the basic exemption limit, the moment you have gambling winnings, you still pay 30% on those winnings. Add to that a 4% health and education cess, and your effective tax rate comes to 31.2%.

For a complete overview of income tax rates applicable across different income categories in India, refer to our updated income tax slab rates guide for FY 2025-26

Here’s something people often miss: this 30% rate applies without giving you any of the usual deductions. You can’t reduce the taxable amount by claiming Section 80C investments, insurance premium deductions under 80D, or any other standard deductions. The entire winning amount gets taxed at 30%, full stop.

 A Quick Summary of Tax Rates on Winnings

Type of Winning	Tax Rate	TDS Section
Lottery, crossword, card games, betting, gambling	30% + 4% cess = 31.2%	Section 194B
Horse racing winnings	30% + 4% cess = 31.2%	Section 194BB
Online gaming (net winnings)	30% + 4% cess = 31.2%	Section 194BA

Section 194B: TDS on Lotteries, Gambling, and Betting

Section 194B of the Income Tax Act, 1961 (now carried into the Income Tax Act, 2025 — more on that below) deals with tax deducted at source on winnings from lotteries, crossword puzzles, card games, and any game of any sort, including gambling and betting.

The rule is: if the prize money from a single transaction exceeds Rs. 10,000, the person paying you the winnings is required to deduct 30% TDS before handing over the money. So if you win Rs. 1 lakh in a lottery, the lottery organizer will deduct Rs. 30,000 as TDS and pay you Rs. 70,000. You still have to report the full Rs. 1 lakh as income in your tax return.

It’s worth noting that the Rs. 10,000 threshold under Section 194B applies per transaction. If you win Rs. 9,000 in one game and Rs. 9,000 in another on the same platform, TDS is not deducted on either individually, but you still owe income tax on both when you file your return.

Game shows like Kaun Banega Crorepati, reality shows with cash prizes, talent shows — all of these fall under Section 194B. The TV production company or game show organizer is responsible for deducting TDS before they hand you the cheque.

 What if the Prize is in Kind, Not Cash?

Sometimes you win a car, a trip, or an appliance rather than cash. The tax rules still apply. The market value of the prize is treated as your income. If it’s a mixed prize (partly cash, partly kind), TDS is deducted from the cash portion. If the cash part is not enough to cover the TDS, the organizer is required to collect the tax from you before releasing the non-cash prize. You cannot take home the car until the tax is settled.

 Section 194BA: TDS on Online Gaming Winnings (Updated 2026)

This is where things got significantly more strict, and it’s the change that surprised many casual online gamers. Starting from 1 April 2023, the Finance Act 2023 introduced a new and separate section specifically for online gaming — Section 194BA of the Income Tax Act, 1961.

Before April 2023, online gaming platforms used to deduct TDS only if winnings exceeded Rs. 10,000. A lot of platforms got around this by splitting payouts into smaller amounts. The government closed that loophole completely.

What Section 194BA Actually Says

Under Section 194BA, online gaming platforms must deduct TDS at 30% on the “net winnings” in a player’s account. There is no threshold. Even if you win just Re. 1, it is technically taxable. The TDS is deducted either:

•       At the time of each withdrawal from the gaming platform, or
•       At the end of the financial year on any balance remaining in the account, whichever is earlier

This means even if you don’t withdraw your winnings during the year, the platform will deduct TDS on your year-end balance. So leaving money in your gaming wallet does not defer the tax. The tax clock runs whether you withdraw or not.

How Net Winnings Are Calculated Under Section 194BA

The concept of “net winnings” is the important part of this rule. The government recognized that online gaming is different from a simple lottery. Players deposit money, sometimes win, sometimes lose, deposit again, withdraw partially — it’s a running account. Taxing gross withdrawals would be unfair because the player may have deposited most of that money themselves.

So the CBDT issued Circular No. 5/2023 on 22 May 2023, which explains the formula set out in Rule 133 of the Income Tax Rules:

Net Winnings = (Amount Withdrawn + Closing Balance) minus (Opening Balance + Total Deposits Made)

In other words, you are taxed only on the actual profit you made — what you end up with after accounting for everything you deposited and what was already in your account at the start of the year. This is a fair approach. The idea is that your own deposited money is not taxed again; only the genuine winnings are.

A Simple Example of How It Works

Say you start the financial year with Rs. 5,000 in your gaming account. During the year, you deposit Rs. 20,000 more. You win and your account grows to Rs. 50,000. You withdraw Rs. 30,000.

Net winnings on this withdrawal = Rs. 30,000 (withdrawn) minus Rs. 25,000 (opening balance Rs. 5,000 + deposits Rs. 20,000) = Rs. 5,000.

TDS at 30% on Rs. 5,000 = Rs. 1,500. That is deducted before the Rs. 30,000 goes to your bank account.

At year-end, if the remaining account balance is Rs. 15,000, and the accumulated net winnings calculation shows this is also profit, TDS will be deducted on that amount too.

What if You Make a Loss?

If your net winnings for the year calculate to zero or negative (meaning you ended up with less than you started with), no TDS is deducted. However — and this is important — you cannot carry forward this loss or set it off against any other income. More on that in a dedicated section below.

 New Income Tax Act 2025: What Changed for Section References

India passed a brand new Income Tax Act in 2025, which came into force from 1 April 2026. This replaced the Income Tax Act of 1961, which had been in use for over six decades. The 1961 Act had grown very complex over the years with hundreds of amendments layered on top of each other. The new Act is designed to be simpler and more readable.

The key thing to understand is this: the new Act did not introduce any new taxes. The tax rates, the 30% flat rate on gambling winnings, the TDS provisions — all of these remain the same in substance. What changed is primarily the structure and numbering of the sections.

The provisions equivalent to Section 115BB (tax on lottery and gambling winnings), Section 194B (TDS on lotteries), Section 194BB (TDS on horse races), and Section 194BA (TDS on online gaming) are now consolidated into corresponding sections under the Income Tax Act, 2025. The concept of “previous year” has been renamed “tax year” under the new Act. The term “assessment year” has also been discontinued.

For practical purposes for FY 2025-26 (the tax year ending 31 March 2026), the old 1961 Act sections still applied because the new Act came into force on 1 April 2026. For income earned from FY 2026-27 onwards, the new Act’s section references apply. The underlying tax treatment of gambling and gaming winnings, however, is unchanged.

If you are working with a CA or a tax professional and they reference different section numbers, it could simply be a matter of which Act they are referring to. The substance of the tax rules remains the same.

 Fantasy Sports (Dream11, MPL): Is It Gambling or Skill?

The fantasy sports debate is probably the most interesting chapter in Indian gaming tax history. For years, platforms like Dream11 and MPL argued — and courts agreed — that fantasy sports is a game of skill, not gambling. Building a team, analyzing player statistics, making strategic picks based on real match data — these things require knowledge and judgment, not just luck.

The Supreme Court of India, across multiple rulings involving Dream11, has held that fantasy sports are games of skill. In total, nine Supreme Court judges considered the issue over multiple petitions and consistently upheld fantasy sports as a legitimate skill-based activity. This distinction mattered because games of skill are generally exempt from gambling prohibitions under the Public Gambling Act, 1867.

The 2025 Turning Point

In August 2025, the central government passed the Promotion and Regulation of Online Gaming Act, 2025. This law took a dramatically different approach — it banned all online real-money gaming in India, including fantasy sports with entry fees, regardless of whether the game was skill-based or chance-based. The traditional skill-versus-chance distinction, which courts had relied on for decades, was effectively removed.

The immediate impact was significant. Dream11 stopped paid contests from around 22 August 2025. The platform shifted to free-to-play formats only. MPL and other platforms faced the same restrictions. Banks were directed not to process transactions for the banned activities.

The gaming industry challenged this law immediately. Industry bodies argued that the Act goes beyond central government powers (gambling is constitutionally a state subject under Entry 34 of the State List) and that it overturns decades of judicial precedent. As of May 2026, the matter is before the Supreme Court and several High Courts have already stayed or questioned parts of the Act. The final outcome remains unresolved.

Tax Treatment of Fantasy Sports Winnings

From a tax perspective, irrespective of the ongoing legal debate about whether fantasy sports are skill games or gambling, the income tax treatment was and remains the same under Section 194BA. Fantasy sports winnings are covered under “Income from Other Sources” and net winnings are taxed at 30%. TDS was deducted by platforms like Dream11 on each withdrawal and at year-end.

If you had winnings from Dream11 or MPL before August 2025, those winnings are taxable and must be reported in your ITR. The TDS already deducted by the platform appears in your Annual Information Statement (AIS) and can be claimed as credit when you file your return. 

GST on Online Gaming: The 28% Rate Since October 2023

This is a whole separate tax from income tax, and it affects the platforms rather than directly hitting players’ winnings. But it has had a big impact on how much players effectively pay when they deposit money on gaming platforms.

Before October 2023, online gaming platforms were broadly paying 18% GST on their platform fee or Gross Gaming Revenue (GGR) — the commission they earned. There was also a distinction between skill games (18% GST) and chance games (28% GST).

In August 2023, the GST Council made a sweeping decision: from 1 October 2023, all online gaming, casinos, and horse racing would be taxed at 28% GST on the full face value of every deposit made by a player. Not on the platform’s earnings — on the entire deposit amount.

What This Means in Practice

If you deposit Rs. 1,000 on a gaming platform, the platform owes Rs. 280 as GST to the government right at the point of deposit. This means the effective amount available for actual gaming is reduced significantly. The platform absorbs some of this, but ultimately it affects the economics for everyone.

To give you a sense of the scale: the GST authorities issued show-cause notices totaling over Rs. 1.12 lakh crore to 71 gaming companies for alleged GST shortfalls. Gaming companies, including big names like Gameskraft (which runs Rummy Culture), Dream11, and MPL, challenged this in court.

Where the GST Battle Stands

The Supreme Court has been hearing the consolidated Gameskraft batch of cases since 2023. The companies’ position is that the 28% GST on full face value is legally and constitutionally flawed — they argue that the prize pool contributed by players is held in trust, not received as consideration by the platform, and therefore cannot be taxed under GST. The government’s position is that the entire deposit is taxable.

After a marathon 31-day hearing, the Supreme Court reserved judgement in August 2025. As of May 2026, the verdict has not been delivered. The 28% GST on full face value remains legally in force for the October 2023 onwards period, but the question of retrospective application (and possibly the legality of the rate itself) awaits the Supreme Court’s decision.

Separately, there are also reports that the government was considering an even higher 40% GST rate on online gaming as part of broader GST rate rationalization discussions, though this had not been officially decided as of May 2026. 

Can You Set Off Gambling Losses Against Other Income?

This is one of those questions that comes up a lot, and the short answer is: no, you cannot.

Under Section 58(4) of the Income Tax Act, 1961, no deduction is allowed for any expenditure or loss related to income from lotteries, crossword puzzles, card games, races, gambling, or betting of any kind. This means:

•       If you lose money gambling, you cannot deduct that loss from your salary or business income
•       If you win Rs. 50,000 from gambling and lose Rs. 80,000 from gambling in the same year, you still pay tax on the Rs. 50,000 win — the loss of Rs. 80,000 gives you no tax benefit
•       Losses from gambling cannot be carried forward to future years to set off against future gambling winnings
•       Even the cost of buying lottery tickets or paying entry fees for a game cannot be deducted from your winnings for income tax purposes

The only relief the system provides is within the online gaming framework under Section 194BA — where the concept of “net winnings” means that your deposits are not taxed, only your actual profit. But across different games or sessions, you cannot net out losses against wins from a different game or source.

This can feel harsh. If you play 100 games and win in 20 of them but lose overall, you still owe tax on those 20 wins. This is simply how Indian tax law treats gambling income, and it is worth keeping in mind before playing with large amounts.

 Cross-Border Gambling Winnings: Income Tax and FEMA Implications

With the rise of offshore betting sites, many Indian players have asked what happens if you win money on a foreign gambling platform. The short answer is: you still owe Indian income tax, and there are serious additional complications under foreign exchange law.

Income Tax on Foreign Gambling Winnings

If you are an Indian resident and you win money on any gambling platform anywhere in the world, that income is taxable in India. Indian residents are taxed on their global income. The fact that the win happened on a server in Malta or a casino in Macau does not matter — if you are ordinarily resident in India, you declare it and pay Indian tax on it.

The practical problem is that foreign platforms obviously do not deduct Indian TDS. So no TDS will appear in your AIS. You need to self-assess and pay advance tax on such winnings during the year, and then report the income in your ITR under “Income from Other Sources.” Failing to do so can attract interest, penalty, and in serious cases, prosecution.

FEMA: The Bigger Complication

Beyond income tax, playing on foreign gambling sites runs straight into the Foreign Exchange Management Act (FEMA), 1999, and RBI regulations. The rules here are quite strict:

• FEMA and the Foreign Exchange Management (Current Account Transactions) Rules 2000 prohibit remittances from India to foreign gambling or betting platform.
• The RBI explicitly prohibits inward remittances from gambling, betting, or any illegal source. Banks are instructed to block such transactions.
• If gambling winnings are remitted from abroad to your Indian bank account, you could face penalties of up to three times the remitted amount under Section 13 of FEMA

The Directorate of Enforcement (ED) has conducted raids across multiple states targeting FEMA violations linked to offshore betting companies. The government has also directed MeitY to block URLs of non-compliant foreign gaming and gambling platforms. As of February 2025, over 1,410 blocking directions had been issued against online betting, gambling, and gaming websites.

In simple terms: playing on foreign gambling sites is legally risky in India, not just from a tax perspective but also under foreign exchange law. If you have already done this and have winnings, speak to a CA and a lawyer about how to regularize the situation. Voluntary disclosure is almost always better than being caught.

 How to Report Gambling Winnings in Your ITR

You cannot use ITR-1 if you have gambling or lottery winnings. ITR-1 is only for salary income, one house property, and simple other sources. Gambling winnings are not simple — you need to use ITR-2 if you have no business income, or ITR-3 if you do have business income.

If you are unsure which ITR form applies to your income or need help filing accurately, our guide on income tax return filing services walks you through the complete process step by step.

In the ITR form, go to the section “Income from Other Sources” and look for the specific schedule for winnings from lotteries, crossword puzzles, races, card games, gambling, or betting. Enter the gross amount — not the amount after TDS was deducted. Then separately enter the TDS details in Schedule TDS2. This allows you to claim credit for the TDS already deducted.

You may be entitled to a refund if your total tax liability is less than the TDS already deducted. For example, if a platform deducted TDS at 30% but your net winnings for the year were lower than the amount on which TDS was calculated (because of losses in later months), filing the correct ITR can result in a refund.

Online gaming winnings under Section 194BA are separately reported in Schedule OS under a dedicated online gaming income field. The ITR form does not permit reporting negative (loss) figures in this field — only positive net winnings are taxed.

 Do You Have to File an ITR Even for Small Winnings?

Yes. This is something a lot of casual gamers do not realize. Under Rule 12BA of the Income Tax Rules, you must file an ITR if the aggregate TDS or TCS for the year exceeds Rs. 25,000. Since platforms deduct TDS on every rupee of net winnings under Section 194BA, even relatively modest online gaming activity can cross this threshold fairly quickly.

More broadly, any income that is subject to tax — including gambling winnings — must be reported in an ITR, regardless of whether TDS has already been deducted. The ITR is your annual declaration to the government. Not filing when you are required to can result in notices, interest charges, and penalties.

If you have ever had income from online gaming, horse racing, lotteries, or any form of gambling and never filed an ITR, it is worth speaking to a Chartered Accountant. The income tax department has access to data from gaming platforms through the Annual Information Statement and Annual Information Report systems. This information is increasingly being used to identify non-filers.

 Casino Winnings in Goa and Sikkim

Goa and Sikkim are the only Indian states that have legalized casinos (physical, land-based ones). If you win at a casino in Goa or Sikkim, the winnings are taxable in exactly the same way as any other gambling income — 30% flat rate under Section 115BB, plus 4% cess.

Casinos in these states are required to collect your PAN details for winnings above a certain threshold. This information flows to the income tax department. If you play at a licensed casino and win, you should declare those winnings in your ITR. The casino may also issue a TDS certificate if tax was deducted at source.

How PKC India Can Help

Tax on gambling winnings is one of those areas where getting it wrong can be expensive. Under-reporting or not filing at all can attract scrutiny from the income tax department, particularly since gaming platforms now report TDS data directly to the government through the AIS system. What appears in your AIS needs to match what you report in your ITR.

At PKC India, we help individuals and businesses navigate tax compliance across all types of income — including the relatively uncommon area of gaming, gambling, and lottery winnings. Whether you need help understanding your TDS certificates from gaming platforms, figuring out your actual net winnings for the year, or dealing with a notice from the tax department, our team of experienced Chartered Accountants can help.

We also advise on cross-border income including foreign gaming winnings, the FEMA implications of overseas gambling activity, and how to regularize past omissions. If you have received winnings from any source and are unsure how to handle the tax, do not wait for a notice to arrive. A proactive approach is always better.

Visit our website or get in touch with our team to discuss your specific situation.

 Disclaimer: This blog is for general informational purposes only and does not constitute legal or tax advice. Tax laws and regulations in India are subject to frequent changes. Readers should verify current rules with the relevant authorities and consult a qualified Chartered Accountant or legal professional for advice specific to their circumstances. The information in this article reflects the position as understood in May 2026. The Promotion and Regulation of Online Gaming Act, 2025 and the GST Gameskraft Supreme Court case were ongoing at the time of writing — their outcomes may significantly change the regulatory and tax landscape for online gaming.

 FAQs:

1. What is the tax rate on gambling winnings in India?

The tax rate is a flat 30% on the gross winnings, plus a 4% health and education cess, making the effective rate 31.2%. This applies to lotteries, gambling, betting, horse racing, crossword puzzles, card games, and game shows. No deductions or exemptions are available against this income. For online gaming specifically, the 30% applies to “net winnings” as calculated under Rule 133 and Section 194BA.

2. Is there any threshold below which gambling winnings are not taxed?

For traditional gambling, betting, and lottery winnings under Section 194B, TDS is deducted only if the prize from a single transaction exceeds Rs. 10,000. However, you are legally required to report and pay tax on all gambling income, regardless of amount, when filing your ITR — the threshold only affects when the TDS is deducted by the organizer, not whether the income is taxable. For online gaming under Section 194BA, there is no threshold at all — even Re. 1 of the net winnings is subject to TDS.

3. What is Section 194BA and how does it affect online gamers?

Section 194BA was introduced with effect from 1 April 2023 specifically for online gaming platforms. It requires platforms to deduct 30% TDS on “net winnings” in a player’s account. The deduction happens at the time of each withdrawal or at the end of the financial year, whichever is earlier. There is no minimum threshold — the 30% rate applies on every rupee of net profit. Net winnings are calculated under Rule 133 as: total withdrawals plus closing balance, minus opening balance and deposits made during the year.

4. Can I claim any deductions on gambling winnings in India?

No. Indian tax law specifically prohibits any deductions against gambling income. Under Section 58(4) of the Income Tax Act, you cannot deduct the cost of lottery tickets, entry fees, or any other expense from your winnings. You also cannot claim standard deductions under Section 80C, 80D, or any other Chapter VI-A provision against gambling income. The entire winning amount (or net winning for online gaming) is taxable at 30%.

5. What is the GST rate on online gaming deposits?

Since 1 October 2023, the GST Council has applied 28% GST on the full face value of every deposit made on online gaming, casino, and horse racing platforms. This is separate from income tax. The platform pays this GST to the government at the point when a player deposits money. The legality and basis of this rate is currently being challenged in the Supreme Court in the Gameskraft batch of cases, and the verdict was awaited as of May 2026. The 28% rate remains in force in the interim.

6. What happens if I win on a foreign gambling website?

If you are an Indian resident, any winnings from foreign gambling platforms are still taxable in India as part of your global income. You must self-declare this income in your ITR and pay tax at 30% plus cess. There is no TDS since foreign platforms do not deduct Indian tax. Beyond income tax, playing on foreign gambling sites also raises serious concerns under FEMA, 1999 — the RBI prohibits both the remittance of money to foreign gambling platforms and the receipt of gambling winnings from abroad. Violations can attract penalties of up to three times the amount involved.

7. Do I need to file an ITR if gambling is my only income?

Yes. If your gambling winnings exceed the basic exemption limit (currently Rs. 3 lakh under the new tax regime), you must file an ITR. Even if your winnings are below that limit but TDS has been deducted, you should file an ITR to claim a refund of the TDS. Under Rule 12BA, if aggregate TDS or TCS for the year exceeds Rs. 25,000, filing an ITR is mandatory. You should use ITR-2 or ITR-3 (not ITR-1) when reporting gambling income. Report the gross winning amount and claim the TDS as credit in Schedule TDS2.