Taxability of winnings from Dream11, Rummy or Online Gambling

This document covers

1. Online Gambling
2. Popular Online Gaming Platforms in India
3. Dream11
4. Taxability of online gambling income
5. Rummy games
6. Budget 2023 Changes
7. Impact of the Promotion and Regulation of Online Gaming Act, 2025 on Platforms like Rummy and Dream11

1. Online Gambling

Online gambling (or Internet gambling) is any kind of gambling conducted over the internet. This includes virtual poker, casinos, sports betting and other such means. Most of the countries have restricted or banned online gambling. Online Gambling service providers are required to have registration specified by the Government of the countries.

Bettings like cricket betting, online poker, football betting, or a game of chance or skill, bettings became popular in India, but most of these bettings are unregulated in India.

2. Popular Online Gaming Platforms in India

Online Gaming platforms can be classified into different categories based on the nature of game, user participation and skill involved. The major types of online gaming platforms are as follows

1. Fantasy Sports Platforms
   • These platforms allow the users to create virtual team of real-life sports players and users will earn points or winnings based on performance of players in real matches.
   • Fantasy sports depend on predicting the performance of real-world players using sports knowledge and statistical analysis.
   • These fantasy sports include cricket, football, kabaddi etc.
   • Examples: Dream 11, Mobile Premier League(MPL), My11Circle, Howzat etc
2. Skill-based Gaming platforms
   • Skill-based games depend on direct gameplay skills, where the player's strategy and decisions determine the result.
   • Examples: Blackjack, Rummy, Poker etc

3. Dream11

• Dream11 is an Indian fantasy sports platform that allows users to play fantasy cricket, hockey, football, kabaddi, and basketball. It is an online game where users create a virtual team of real-life players and earn points based on the performances of these players in real matches.
• A user who scores the maximum points in their joined contests attains the first rank on the leader-board. Dream11 offers free and paid contests. A user has to pay a certain fee to join a contest and can win real cash.
• To participate in a Dream11 game, a user must be at least 18 years old and needs to get their profile verified using their PAN.

4. Rummy games

• Rummy Culture, Rummy Circle or similar are an online rummy gaming platforms which allows the users to play Indian rummy card games online against other players.
• These can be played through their app or website.
• The game strategy in these games includes analyzing the cards or game situation, planning moves in advance, observing opponent's gameplay, managing risks and probabilities and making timely decisions during the game
• To participate in these games, a user must be at least 18 years old and needs to get their profile verified using their PAN.

5. Taxability of online gambling income

Income received through online gambling is taxable in the hands of recipient.

1. Rate of Tax: Income in the nature of online gambling or betting is taxable @ 30% plus surcharge if applicable and Health and education cess @ 4% u/s 194 of IT Act 2025 (u/s 115BB of IT Act 1961).
2. Deduction's u/s Chp VIA: No Deductions under Chp VIA ( u/s 123 of IT Act 2025 (u/s 80C of IT Act 1961) to u/s 154 of IT Act 2025 (u/s 80U of IT Act 1961) ) are allowed.
3. Claim of Expenses: No Expenditure or allowance can be allowed from such income.
4. Deduction of TDS: TDS needs to be deducted @ 30% if the amount of winning exceeds Rs 10,000. TDS needs to be deducted by the person to whom a specific license has been granted by the Government.
5. Losses from Online Gaming: Losses from one online game cannot be adjusted against winnings from another game or any other income except to the extent considered while calculating net winnings within the same user account as per the prescribed formula. Also the losses from online gaming cannot carry forward
6. Set off losses: Losses from any other head of Income cannot be adjusted with income from online gaming
   NOTE:

   ---

   W.e.f 01st July 2023, there is no threshold for the TDS deduction. TDS needs to be deducted on net winnings at the end of the financial year.

7. Basic Exemption Limit: Basic Exemption Limit of Rs 2,50,000/3,00,000 (Rs 4 lakhs from 01 st April 2025) is not allowed in respect of Gambling earnings.
8. Taxability of winnings received in Kind or partly in Kind: When the winnings are in kind or partly in cash or in kind, the person who is responsible for payment should ensure that the TDS has been paid to Government and then only he should release the winnings

For more information on IT Filing, Expert Consultation related to Taxability on Dream11 and/or other Online betting income, take the Online Tax Service or Call +91 7288 900 900

6. Budget 2023 Changes

Part 115BBJ of the Income Tax Act of 1961 was added in Budget 2023. In accordance with tax regulations, this section specifies the tax rate and computes the net winnings from online gaming.

How to Calculate Net winnings

The formula to calculate net winnings from online games is (A + D) — (B + C)

• A = Aggregate amount withdrawn during the financial year from the user account
• B = Aggregate amount of non taxable deposit made in the user account during the financial year
• C = Opening balance of user account at the beginning of financial year
• D = Closing balance of user account at the end of financial year

The TDS needs to be deducted @ 30% on net winnings at the earlier of the following

1. At the time of withdrawal by the user
2. At the end of financial year

7. Impact of the Promotion and Regulation of Online Gaming Act, 2025 on Platforms like Rummy and Dream11

The Promotion and Regulation of Online Gaming Act, 2025 introduced a major regulatory shift in India’s online gaming industry. The Act was enacted by Parliament in August 2025 to create a national framework for regulating online gaming and to curb real-money gaming activities. The law has had a significant impact on real-money gaming platforms such as Dream11, Rummy Culture, Rummy Circle, Mobile Premier League (MPL) etc.

• Platforms offering real-money contests or betting formats were required to stop such operations. Several major gaming companies suspended cash games and contests after the law was passed.
• Suspension of Paid Contests in Dream11 etc
• Closure or Suspension of Certain Platforms w.e.f 23 rd Oct 2025. Ex: Rummy Culture, Poker Baazi, MPL
• Shift Toward Non-Monetary Gaming and eSports