Is GST charged on online gaming deposits, and how is income tax calculated on winnings? They are separate taxes with different bases. GST is charged on the supply of online money gaming and is valued by reference to the amount paid or deposited with the supplier on the player’s behalf. Income tax applies to a player’s net winnings, calculated using activity in the relevant user account. Official sources reviewed here state a 28% GST rate and a 30% income-tax rate on online-game winnings, but those figures belong to different tax regimes and dates.
GST on deposits and income tax on winnings are different
GST concerns the gaming supply: official materials describe its value by reference to money paid or deposited with the supplier on the player’s behalf. It is not a calculation of the player’s net winnings. Income tax, by contrast, applies to net winnings calculated under rules that take account of deposits, withdrawals and account balances.
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| Question | GST on online money gaming | Income tax on online-game winnings |
|---|---|---|
| What is taxed? | The gaming supply, valued by reference to the amount paid or deposited with the supplier on the player’s behalf. | The user’s net winnings, calculated under user-account rules. |
| Rate and timing stated in the cited official materials | 28%; a Ministry of Finance release says this GST rate took effect on 1 October 2023. Lok Sabha answer AU1339; Ministry of Finance release, 26 March 2025. | 30% for winnings from online games under section 115BBJ in the special-rate schedule to Notification No. 46/2026. The Ministry of Finance says the 30% treatment began from assessment year 2024–25. Notification No. 46/2026; Ministry of Finance release, 26 March 2025. |
The 28% figure is the rate stated in the 2025 Parliamentary answer and Ministry release; the cited 2025 FAQ on GST Council decisions concerns goods-rate notifications and does not establish a change to the online gaming service rate. Press Information Bureau FAQ-3, 18 September 2025.
Do you pay income tax on the full amount deposited?
No. A deposit is not automatically a taxable net win for income-tax purposes. Rule 135 of the notified Income-tax Rules, 2026 computes net winnings using account activity, including withdrawals and closing balance, while allowing for non-taxable deposits and opening balance. The rules also account for earlier withdrawals on which tax has already been deducted. If the relevant deposits and balances offset withdrawals under the applicable formula, the resulting net winnings can be zero. Income-tax Rules, 2026, Rule 135.
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The rules distinguish taxable deposits from non-taxable deposits. They include in taxable deposits amounts that do not qualify as non-taxable, including certain amounts paid directly to the user outside the user account. “User account” covers an account with the intermediary where deposits or winnings are credited and withdrawals are debited; its label does not determine whether it is covered.
How the account-based net-winnings calculation works
Rule 135 provides formulas for computing net winnings during the year and at withdrawal points. The year-end formula uses aggregate withdrawals plus the closing account balance, less non-taxable deposits and the opening balance. The rules separately address deductions at first and later withdrawals and take account of winnings on which tax has already been deducted. The precise result depends on the facts and the version of the rules that applies to the tax year.
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Multiple accounts with one intermediary
If one user has multiple accounts with the same intermediary, the rules aggregate deposits, withdrawals and balances for this calculation. Transfers between those accounts are disregarded as deposits or withdrawals for tax-deduction-at-source purposes.
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For a non-cash prize, its money equivalent is treated as deposited and withdrawn at the same time for the calculation. Promotional or bonus money that can only be used to play and cannot be withdrawn is ignored; if it is later converted into withdrawable funds, it is treated as a taxable deposit at that point.
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Is tax deducted when you withdraw winnings?
The rules provide for tax deduction at source at withdrawal points as well as a year-end calculation, so a withdrawal is relevant but does not by itself establish that the entire amount withdrawn is taxable net winnings. The formulas take account of deposits, balances and prior withdrawals already subject to deduction. Check the applicable rules and your account statement rather than treating every withdrawal as a separate measure of taxable winnings.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Does a game of skill get different tax treatment?
The statutory definition of “online money gaming” includes games whose outcome or performance is based on skill, chance, or both. The 2025 Parliamentary answer reproduces a definition covering players who pay or deposit money or money’s worth in expectation of winning money or money’s worth, whether or not the outcome is based on skill, chance, or both. The tax definition therefore does not create a general exemption for a game simply because it involves skill. Lok Sabha answer AU1339.
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Tax rules do not establish whether a game is legal
Tax treatment and legality are separate questions. The online-money-gaming definition itself refers to whether an activity is permissible under other applicable law. The Ministry of Finance has stated that betting and gambling are state subjects and that state legislation defines related offences. A tax rule applying to a game does not certify that the game or its operator is lawful in a particular state. Ministry of Finance release, 26 March 2025.
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Which tax-year rules should you use?
The rate references span different official documents and dates: the 2025 Parliamentary answer states 28% GST, while the 2026 notified return-form schedule lists 30% for section 115BBJ. The Ministry of Finance says the income-tax treatment began in assessment year 2024–25 and the GST rate took effect on 1 October 2023. The 2026 rules also use updated statutory references in some provisions. Apply the law, return form and account-calculation rules relevant to the tax year in question; the figures should not be presented as if both taxes began in 2026.
This is a general explanation, not a determination of an individual filing liability. Complex account activity, non-cash prizes, promotional credits or a transition between tax-year rules may warrant advice from a qualified Indian tax professional.
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