Report Income from gaming apps like Dream11, Rummy or face tax action

It is mandatory to report such earnings --- even if the overall income is exempt under the current tax brackets.

It is necessary to file income tax returns if you are earning money from online games such as Dream11 or Rummy. Such earnings are taxed differently with no exemption based on amount. The Income Tax Act outlines the a hefty 30% tax for online gaming income — without making any explicit distinction for the type of game or format.

It is mandatory to report such earnings — even if the overall income is exempt under the current tax brackets. This is because money made through online gaming incurs a separate and flat 30% tax unlinked to other factors. The tax on online gaming income has to be paid even if total income (excluding what you earned from these games) is below the taxable threshold. Losses incurred due to gaming will also not be adjusted against other income.

According to Section 115BBJ of the Income Tax Act, money earned by winning any online game is subject to taxation at a flat rate of 30% on the net amount. There is no basic exemption limit, deductions or set off of losses for such earnings. The 30% levy is also separate from regular income tax paid on the rest of your income (excluding the winnings).

“The income-tax payable shall be the aggregate of: (i) the amount of income-tax calculated on net winnings from such online games during the previous year, computed in the manner as may be prescribed, at the rate of thirty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the net winnings,” the Act explains.

It broadly defines an ‘online game’ as any game that is “offered on the internet and is accessible by a user through a computer resource including any telecommunication device”.

 The new law aims to curb social harms such as addiction and financial exploitation — with stringent penalties including fines and imprisonment for violations. The Operational scope of Section 115BBJ is likely to shrink from next year as such winning will (for the most part) not exist any more. The new Online Gaming Act completely bans real money gaming platforms — while making an exemption for e-sports and online social games.

Meanwhile the new Income Tax Bill 2025 has proposed several changes to this section with a new Clause that suggests taxing gross winnings (instead of net) at a flat 30% rate. This means the tax computation will shift from net profits to total gross receipts from gaming, simplifying compliance but increasing the taxable base.