How winnings on fantasy sports apps like Dream11 and MPL are taxed1 min read . Updated: 29 Apr 2021, 06:36 PM IST
- The details of taxation are covered under Section 115BB of the Income Tax Act
The growth of fantasy games based on cricket is skyrocketing. The industry could be worth $3.7 billion by 2024, according to a report by the Federation of Indian Fantasy Sports (FIFS) and KPMG.
Courts rulings that fantasy sports are games of skills has prompted new players to join the industry.
In the current season of the Indian Premier League (IPL), If you are playing fantasy sports on apps such as Dream11, My11Circle, Mobile Premier League (MPL), or Paytm First Games, your winnings are taxable.
Fantasy sports are games where players assemble virtual teams based on statistics of real-life players.
The details of taxation are covered under Section 115BB of the Income Tax Act. It mentions that winnings from lotteries, crossword puzzles, races, or card games will be taxable. The winnings are considered as 'income from other sources'.
Players don't get any deduction for expenditure. When calculating the tax, it doesn't matter the amount of money you paid to participate in the game. The tax is on the amount won.
Suppose you had participated in a fantasy sport by paying ₹1,000 and won ₹10,000. The tax will be on the winning amount ( ₹10,000). You cannot deduct the ₹1,000 that paid to participate.
Also, if you lose two games and won one, you will still need to pay the tax.
According to the Dream11 website, A tax of 30% is deducted at source when a user wins more than ₹10,000. The remaining amount (after tax deduction) gets credited to the Dream11 account as 'winnings'. Users also get a TDS certificate if they have verified their PAN card.
The tax deduction at source by the fantasy sports companies will be reflected in Form-26AS.
Dream11's website also states that the company excludes cash bonus which it offers when calculating TDS.
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