Section 194BA – TDS on Winnings from online games – CBDT Clarifies

Circular No. 5 of 2023, issued by the Central Board of Direct Taxes (CBDT), provides guidelines for the implementation of section 194BA of the Income-tax Act, 1961. This section pertains to the deduction of income tax on winnings from online games. The circular clarifies various aspects, including the computation of net winnings, treatment of multiple user accounts, taxation of deposits, treatment of bonuses and incentives, withdrawal criteria, relaxation for insignificant withdrawals, taxation of winnings in kind, valuation of winnings, and penal consequences. The circular emphasizes the responsibility of deductors to comply with tax deduction requirements and provides a timeline for depositing any shortfalls in tax deductions.