Indian Budget 2023: Proposed Amendments for the Indian Gaming Industry & its Impact

[By Anuradha Garg]

The author is a student of Gujarat National Law University, Gandhinagar.



The new Budget 2023-24 has proposed certain amendments for the gaming sector in India which has witnessed striking growth in the past few years. Currently, the gaming market in India has been estimated to be approximately twice that of China and thrice that of the USA.[i] However, the gaming industry has faced several challenges in India which has hindered its growth. Taxation on this sunrise sector has always been a contentious issue. The growth potential of this sector makes it imperative to analyse the proposed amendments for the gaming industry in budget 2023.

Proposed Amendments

  • In Budget 2023-24, the Union Government has proposed the removal of the 30% Tax Deducted at Source (Hereinafter as “TDS”) threshold of 10,000 INR on net winnings.[ii] Earlier, if a player won more than 10,000 INR, the online gaming operator had to withhold 30% as TDS. It follows that under the new regime, irrespective of the money won by the gamer, it will be subjected to TDS under the Income Tax Act, 1961. Hence, the existing provision of Section 194B of the Income Tax Act, 1961 will stand amended.[iii] However, this threshold removal would only apply to online games and games like puzzles and lotteries would be excluded from the application of this provision.
  • The Finance Bill, 2023 has proposed the insertion of two new provisions to the Income Tax Act, 1961. These are Section 194BA which prescribes a tax deduction on net winnings from online games at the end of the financial year or when such winnings are withdrawn and Section 115BBJ which provides for a tax rate of 30% on net winnings from online gaming.[iv] Section 115BBJ also defines ‘computer resource’, ‘internet’ and ‘online game.’[v] The two provisions will be effective from July 1, 2023, and April 1, 2024, respectively.

Impact Analysis

  • The removal of the minimum threshold can be seen as a welcome move. Subjecting the income from gaming to TDS under the Income Tax Act, 1961 essentially means that such income will form part of the total income of the player. Therefore, online gaming contests can be created with higher winning amounts and will ultimately promote India’s economic growth. Further, the minimum threshold for TDS had led to the splitting of winnings by players and therefore, this amendment will also aid in curbing this practice. The only downside of such a provision will be that casual players constitute a large proportion of online gaming platforms and they usually earn less than 10,000 INR. This means that the current proposed framework will subject them to TDS if they fulfil the requisite criteria as per the Income Tax Act, 1961. The removal of the minimum threshold will act as a deterrence.
  • Since the new provisions will take effect from July 1, 2023, the gaming companies would be required to follow the old provision i.e., Section 194B for the period preceding it. This can be troublesome and can cause inconvenience in the computation of tax especially when a player wins monies less than 10,000 INR prior to July 1, 2023, but withdraws it a time after the amendment comes into force. Therefore, whether the tax has to be withheld at the time of winning or at the time of withdrawing that winning will remain a matter of concern unless the government clarifies the same. Further, the unresolved complexities will also burden the gaming companies with heavy costs of compliance.
  • Removal of the minimum threshold for online games will also help in settling the conundrum of the ‘game of skill’ and ‘game of chance’ in India. The Finance Bill, 2023 clearly excludes lotteries and puzzles from the purview of this provision which means they will continue to be subject to the 30% TDS requirement. In a way, it also differentiates games of skill from games of chance which the Indian Courts have also attempted to do in various landmark cases like R. Lakshmanan v. State of Tamil Nadu.[vi] A possible outcome of such distinction can be the standardization of tax rates and the formation of tax slabs for the gaming industry in the near future. It will thus help in simplifying the tax regime for the Indian gaming industry.
  • The new amendments to the Income Tax Act will also pave the for the players to set off their losses using their winnings from such gaming contests. Since now, the income from online games can come within the ambit of ‘income from other sources,’ the same can be adjusted as per the Income Tax laws and rules.
  • With the addition of ‘online game’ under Section 194BA, it seems that Section 194B relates to ‘offline game’ under the Income Tax Act, 1961. Thus, in the context of betting and gambling, which can be held both online and offline, the direct tax implications can vary depending upon the definition of ‘online game’ which will likely be clarified by the government in due course of time.


Good regulatory practices and fair tax policies are crucial to the growth of any economic sector. The same holds true for the Indian gaming sector. While the government has proposed positive amendments on the direct tax front, the future of the Indian gaming industry on the indirect tax front remains ambiguous. In July 2022, the Central Government proposed a 28% GST levy on online games of chance and skill as against the present 18% GST.[vii] This proposal was already vicious for the domestic companies considering the global tax rate for the gaming sector ranges between 15-18%. Further, the non-addressal of the same in the budget 2023 has added to the quandary.

To address the loopholes in the proposed framework, certain measures can be taken by the government. As highlighted earlier, the removal of the minimum threshold will deter casual gamers who earn less than 10,000 INR in online games. Therefore, the government can introduce special provisions to exempt such category of gamers from the scope of this amendment while also defining who will qualify as a ‘casual gamer.’

Further, though the date of the application of amendment has been clarified, no clarity has been offered regarding the date of computation of tax. Therefore, it is incumbent upon the government to elucidate whether the computation of tax will be at the time of winning or at the stage of withdrawal of the winning. This will help the online gaming industries in reducing their cost of compliance.

Furthermore, the proposal will also lead to the revamping of the entire gaming industry in India. Thus, the government can take measures which may help in reducing the regulatory cost of compliance especially for the small players in the market. For instance, a dedicated online portal stating all the relevant information can be established by the government to streamline the process of compliance. This will also aid in promoting information symmetry among the stakeholders in the gaming industry.

 Nevertheless, the proposed amendments are appreciated to the extent that they will promote the gaming industry in India by standardizing the tax regime. It is hoped that the government would also come up with commendable policies in the arena of indirect tax on the gaming industry soon.

[i] Aprameya Rao, India Is Emerging As A Gaming Hub: Here’s Why, NDTV Profit (Nov. 15, 2022, 08:34 AM),

[ii] Raghav Aggarwal, Indian gaming industry seeks clear tax regime, duty credit scrips in Budget, Business Standard (Jan. 25, 2023, 02:48 PM),

[iii] The Finance Bill, 2023, cl. 82, No. 17 of  2023 (India).

[iv]The Finance Bill, 2023, cl. 54, No. 17 of  2023 (India).

[v] Supra note iii

[vi] K.R. Lakshmanan v. State of Tamil Nadu, 1996 SCC (2) 226.

[vii] Business Standard,, (last visited Mar. 15, 2023).


Leave a Reply

Your email address will not be published. Required fields are marked *

Contact Us

Kerwa Dam Road., 
National Law Institute University, Bhopal
Madhya Pradesh, India. 462044​.

write to us at –