RummyTime TDS and tax rules: what players need to know

Now that online rummy has started to gain a lot of popularity in India, it is also important for our players to understand how taxes are calculated on their winnings or how income tax on gaming has evolved with time with the new financial year tax rules. The reason why we want to keep our players well informed about the tax regulations is to regulate transparency on our platform. Under the Indian Income Tax Act, winnings from games like rummy are subject to Tax Deducted at Source (TDS), which applies when your earnings exceed a specified limit. The Central Board of Direct Taxes (CBDT) has laid out clear guidelines for gaming platforms to deduct and report taxes. In this blog, we break down what RummyTime players need to know about TDS deductions and income tax rules on gaming.

Understanding TDS in online gaming

When we consider online gaming in India, TDS (Tax Deducted at Source) refers to the tax that platforms like RummyTime are legally required to deduct from a player’s winnings before the player withdraws their winnings. As per the Income Tax Act, any winnings from games of skill that exceed the prescribed limit are subject to a flat 30% TDS.

Understanding this deduction is crucial to avoid surprises and to plan your withdrawals wisely. Always keep track of your winnings and TDS deductions for smooth income tax filing at the end of every financial year.

What is TDS in rummy? 

TDS also known as Tax Deducted at Source is a tax mechanism under the Indian Income Tax Act in which a certain percentage of income is deducted at the point of earning. As we take rummy into consideration, it is to be understood that all gaming platforms are required to deduct 30% of your eligible winnings before they are credited to your account or withdrawn.

The sole purpose of TDS is to ensure tax compliance and bring transparency to online earnings. By deducting tax initially itself, the government ensures that players report their winnings and pay taxes honestly, avoiding evasion. For players, this means fewer hassles during income tax filing, as the TDS deducted is already reported to the tax authorities of the nation and reflected in your Form 26AS.

To keep it short, TDS is not a charge taken by the platform on your winnings, it is an advance payment of the income tax that you owe on your game winnings to the government authorities.

Current TDS deduction rates for RummyTime players

As per Indian tax laws, flat 30% is deducted at source as TDS that is applicable on net winnings from online games like rummy. RummyTime follows this regulation strictly to ensure compliance. Net winnings are calculated as the total amount won minus the total amount deposited by the player. This TDS is deducted at the time of withdrawal.

Example: If a player deposits ₹10,000 and wins ₹40,000, their net winnings are ₹30,000. On withdrawing, ₹9,000 (30% of ₹30,000) will be deducted as TDS.

As of now, there is no exemption limit. TDS applies to all net winnings, even if the amount is less than ₹10,000, following the updated rules by the Central Board of Direct Taxes (CBDT) effective from April 1, 2023.

Also check: RummyTime TDS Policy

Understanding section 194B of the Income Tax Act 

Section 194B of the Income Tax Act makes sure the deduction of tax on winnings from games, lotteries, and competitions which also includes online gaming platforms like RummyTime. But to understand this better, let’s first understand what are net winnings?

Net winnings are calculated as: Net Winnings = Total Withdrawals – Total Deposits

Pre-2023: TDS was deducted only when winnings exceeded ₹10,000 in a single transaction. So, if you won ₹9,500 in one game, no TDS was applied. But if you won ₹15,000, a 30% TDS was deducted from that amount immediately.

After the changes made by the government,

Post-April 1, 2023: With the new tax regime for online gaming, TDS is deducted on net winnings, regardless of the transaction amount and the amount won. So as mentioned earlier, TDS is now deducted at two points:

1. At the time of withdrawal, if your net winnings are positive.
2. At the end of the financial year, on any remaining net winnings that are not withdrawn.

Example 1: You deposit ₹20,000 and win ₹50,000. Your net winnings are ₹30,000. On withdrawal, RummyTime will deduct ₹9,000 (30% of ₹30,000) as TDS.

Example 2: You wish to keep your winnings and don’t withdraw during the year but end up with ₹15,000 in net winnings by March 31. The government through RummyTime will deduct ₹4,500 (30%) as year-end TDS.

How to check TDS deducted on your RummyTime withdrawals?

Here is how you can download Form 26AS from the income tax portal:

Step 1: Visit income tax e-filing website
Step 2: Login either with PAN or Aadhar Card number and continue
Step 3: Select “Income Tax Returns” from e-file.
Step 4: Click on “View Form 26AS” and select “Confirm” next
Step 5: Click on “View Tax Credit” (Form 26AS)
Step 6: Select the ‘Assessment Year’ and format you need to view Form 26AS in.
Step 7: Enter the Verification Code and click on the View/Download button.

Now if you wish to view your TDS deductions on your RummyTime account, here are the steps to follow:

Step 1. Open the RummyTime app.
Step 2. Go to the wallet section on the homepage.
Step 3. Select TDS Summary.
Step 4. Once the KYC is completed, you can access your TDS summary.
Step 5. You can view all your TDS deductions quarterly for the year.

Filing your TDS refunds

If you want to file your TDS refunds online, here’s what you need to do:

• 1. You have to first register yourself on the IT department’s website: https://www.incometax.gov.in/iec/foportal/.
• 2. Pre-validate the bank details by entering the bank account number and IFSC and nominate the bank account for refund.
• 3. After registration, you can file your income tax return by downloading the relevant ITR form.
• 4. Fill in the relevant details, upload the form and click on submit.

You can also:
Associate yourself with ClearTax through RummyTime to help you file the income tax returns and claim your TDS refunds. You can go on to our app to access the ClearTax Portal and proceed with filing your returns.

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