TDS Policy

Taxation Law

In accordance with the provisions of the Finance Act, 2023, the following TDS policy is applicable for all players on PokerNXT from 01 April 2023:

• TDS of 30% will be applicable on Net Winnings Withdrawal in a financial year.
• The Net Winnings will be calculated based on overall gameplay in a Financial Year.
• As per the new policy, TDS will be calculated every time a user raises a withdrawal request from the Cash Wallet. (Total withdrawals in a financial year + Current withdrawal amount - total deposits in a financial year - opening balance on 01 April in cash wallet) x 0.3 - Total TDS deducted in a financial year
• If the TDS value (using the above formula) is greater than Rs 0, then the amount credited to the bank account would be the Current withdrawal request - TDS
• If the TDS value (using the above formula) is Rs 0 or below, then the amount credited to the bank account would be equivalent to the current withdrawal amount.
• Users can place only one withdrawal request at a time. To place the next withdrawal requests users will have to wait for the processing of the current withdrawal request
• As per the circular by CBDT, incentive bonuses would form part of net winnings and tax under section 194BA of the act is liable to be deducted at the time of withdrawal and at the end of the financial year respectively.
• Affiliate commissions, referral bonuses, rewards claimed through loyalty chests, or any other promotional bonus/incentive will be credited to the user’s poker wallet and will be considered a part of their net winnings. 30% TDS will be applicable (as per the above formula) when placing a withdrawal request from the Cash wallet.
• TDS will be applicable at 30% as per section 194 BA of the Income Tax Act, 1961, in case Net Winnings are wholly in kind or partly in cash or partly in kind. The net winnings in kind will be released only after players submit proof of payment of such tax. TDS on Net winning in kind will be calculated as defined in the guidelines issued by the CBDT.
• Tax deduction on withdrawal will now have to happen as follow:
  • a. say a player has Rs.10000 in PW and Rs. 0 in CW. To withdraw, he will move the money to CW. As per the new rule, TDS should not be deducted at this milestone and the whole sum will move to CW ie. Rs. 10000.
  • b. Now with CW=RS. 10000, PW = 0, the player clicks withdraw for Rs10000. The TDS is to be deducted at this point. Thus, 7000 Rs. will be sent to the player's bank account.

Note

Withdrawal means when a player raises the request from his cash wallet and the amount is transferred to his registered KYC-cleared bank account.

What Does It Mean For Players?

Find below a few scenarios to understand the application of the aforementioned TDS Policy.

Scenario 1: If your net winnings are more than 0, then 30% TDS will be deducted from net winnings at the time of withdrawal.

Example:

Zero TDS Withdrawal amount: If you withdraw up to ₹5,000, then there will be zero TDS deducted as net winnings will be ₹0. See the calculation below:

Scenario 2: If you have paid TDS in previous withdrawals, then no TDS is applicable on withdrawals till your net winnings cross the amount for which you have already paid TDS. (assuming TDS of ₹1800 paid on winnings of ₹6,000 as initially, you had positive net winnings of ₹6,000)

In the above scenario, No TDS applies until your net winnings cross ₹6,000 (already taxed).

If the TDS value is ₹0 or below, no TDS will be deducted and the entire current withdrawal amount will be credited to the user’s bank account

Scenario 3:You have paid TDS on initial winnings during the financial year but your net winnings have reduced post that.

Example:

TDS of ₹6000 was paid on winnings of ₹20,000 as initially, you had positive net winnings of ₹20,000. Post this, you deposited another 10,000 and you lost that. Now your cumulative net winnings have been reduced to ₹10,000, subject to applicable law, the excess TDS deducted can be claimed as a refund in your annual income tax filing subject to provisions of the Income Tax Act, 1961.

Scenario 4: At the end of the financial year, if you have an amount in your wallet, then TDS will be calculated on that amount by considering it as a withdrawal of the financial year and the remaining amount will be carried forward to the next year as opening balance deposit amount. Withdrawal from the opening balance deposit amount will not be subject to TDS in the following years.

Example:

In the above scenario, the account balance at the end of March 31, 2024, would be considered as the current withdrawal request and the TDS will be calculated as follows:

Important Rules Regarding TDS Calculation on Winnings:

1. For FY2022-23 ending on 31st March 2023, PokerNXT will calculate TDS on the basis of Section 194B of the Income Tax Act. You will get a TDS certificate from us which you can use at the time of filing your annual IT return. Your completed KYC is required to apply for a TDS certificate.
2. As per the directives from the government under section 206AB of the Income Tax Act, additional TDS will be deducted on applicable transactions in case the player falls under the category of specified persons.