- In line with the provisions of Section 194BA of the Income Tax Act 1961, as amended by the Finance Act, 2023, the following TDS policy shall apply to all Users on FanClash
- TDS shall be deducted on all withdrawals with a positive “Net Winnings”.
- Tax Shall be deducted at the rate of 31.2% (30%+4% Cess) on any positive Net Winnings.
- Tax shall also be deducted at the end of financial year on year end wallet balance (excluding the amount on the table) by considering it as a withdrawal amount. Post applying TDS on the remaining balance (as per policy), the remaining amount will be carried forward to the next financial year as starting balance. Carried forward balance will be considered as investment for next year and TDS would not be applicable for that amount.
- Here, Net winnings = Total Withdrawals - Total Deposits (in a financial year).
Apr 1st to Mar 31st duration shall be considered a financial year.
- Prior to the introduction of Section 194BA, Tax was deducted only on Net Winnings in excess of Rs.10,000/-. The Tax was deducted upon distribution of Winnings to your in -game winnings Wallet. Post 1st April 2023, Tax shall not be deducted upon distribution of winnings, but withdrawals of Net Winnings from your in-game wallet to your bank account.
- Below are a few scenarios to understand application of the aforementioned TDS Policy.
- Scenario 1:
- If your net winnings (including the withdrawal amount) is more than 0, then a tax of 31.2% shall be withheld on the withdrawal.
User 1 User 2 Total Withdrawals till date in the Financial Year (A) 3,000 - Total Deposits in the Financial Year (B) 5,000 5,000 Amount being withdrawn by user (C) 10,000 4,000 Net Winnings (A+C-B) 8,000 - TDS 2,496 - Amount Credited to Bank Account 5,504 4,000
- 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.
User 1 User 2 Total Withdrawals till date in the Financial Year (A) 13,000 4,000 Total Deposits in the Financial Year (B) 8,000 8,000 Amount being withdrawn by user (C) 10,000 10,000 Net Winnings (A+C-B)=D 15,000 6,000 - - - Total TDS 4,680 1,872 Less: Tax Already Deducted 2,496 - Current Tax (E) 2,184 1,872 - - - Amount Credited to Bank Account (D-E) 12,816 4,128
- Scenario 3:
- You have paid TDS on initial winnings during the financial year but your net winnings have reduced post that.
Total Withdrawals till date in the Financial Year (A) 20,000 Total Deposits in the Financial Year (B) 10,000 Net Winnings in the FY 10,000 Tds Already Paid 3,120
- Post the above, if your net winnings reduce to Rs. 5,000, then you shall be able to claim a refund of the tax while filing your annual income tax return.
- Please note that the TDS Policy is based on the understanding of the provisions as introduced/ amended by Finance Act, 2023. Since the detailed rules for the same have not been notified by the CBDT, the Company reserves its right to modify/ change/ amend the TDS Policy change in the existing law.