Report Dream 11 income in ITR or get tax notice

If you have earned any income from online real money gaming like Dream11, Rummy, Ludo, etc, you have to file are required to file an income tax return (ITR) mandatorily without exception. While the income tax law doesn’t explicitly say that filing of ITR is mandatory if you have any income from online real money gaming like from Dream 11, Rummy, etc. This requirement to file an ITR solely for reporting such gains is stated in the tax rules.

According to Rule 12BA, you must file an ITR, if the aggregate of TDS or TCS for the year exceeds Rs 25,000, and TDS needs to be deducted on every rupee you earn from real money online games. This is the reasoning behind the need to file an ITR to report such incomes.

Keep reading to learn more about the tax compliances you need to be aware of if you have gains from real money online games.

ITR filing requirement for online gaming income
Chartered Accountant (Dr.) Suresh Surana explains:

• Under Section 115BBJ of the Income-tax Act, 1961, income from online real money gaming is taxable at a flat rate of 30% without allowing any basic exemption limit, deductions, or set-off of losses.
• If a person has income from real money online gaming and their net taxable income is below Rs 2.5 lakh, the reporting of such income in the ITR is mandatory.
• Further, losses from online gaming cannot be carried forward or adjusted against any other income and such person may file their ITR for reporting such losses.

Also read: Chartered Accountants caution joint bank account holders about this critical issue with tax rules that can lead to tax notices

Rule 12BA makes it compulsory to file ITR if TDS threshold is crossed
Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP, explains:

• The special tax rate under Section 115BBJ of the Income-tax Act, 1961 requires winnings from online games to be taxed at a flat 30% (plus surcharge and cess), with no benefit of basic exemption limit, deductions, or rebates.
• It’s important to note that losses from online gaming can’t be set off against winnings from other games or any other income, and you can’t carried forward the loss to utilize it as set off in the future years.
• The ITR utility also does not permit reporting of negative figures under the dedicated online gaming field in Schedule OS. While such transactions may be disclosed, only positive net winnings are taxed.
• Since gaming platforms are obligated under Section 194BA of the Income-tax Act, 1961 to deduct tax at source (TDS) on withdrawals and closing balances, and these are reported to the Income Tax Department against the taxpayer's PAN, filing an ITR could become necessary even if the overall income is below Rs 2.5 lakh. Having said so, Section 139(1) of the Income Tax Act, 1961 outlining situations where return filing is compulsory, does not explicitly cover such situations.
• However, a corresponding Rule in Income tax Rules, 1962, i.e. Rule 12BA makes it compulsory to file return of income, if the aggregate of TDS or TCS in a year exceeds Rs 25,000.”

Also read: Good news for salaried taxpayers: Limits for these two tax-free perquisites raised substantially in Finance Act, 2025

Source: CA (Dr.) Suresh Surana

Even if I have Rs 10 income from online real money gaming and my total income is less than Rs 2.5 lakh, do I need to file an ITR for FY 2024-25?
Chartered Accountant Mohit Gupta, Partner – PNAM & Co LLP, says:

• “Yes, in this situation an ITR will be required. Unlike regular income, winnings from online gaming are governed by a special regime under Section 115BBJ of the Income-tax Act. Such winnings are taxed at a flat rate of 30%, plus applicable surcharge and health & education cess, without reference to the basic exemption limit or income slabs.”
• “Accordingly, even if the winnings are as nominal as Rs 10, they are chargeable to tax, and disclosure in the ITR becomes necessary. The reporting is to be done under the heads of income “Income from Other Sources.”
• In practice, gaming platforms are required to deduct tax at source (TDS) at 30% on the net winnings either at the time of withdrawal or at the end of the financial year. Nevertheless, filing the ITR remains an obligation for the taxpayer in order to ensure compliance and proper reflection of such income.”

Surana says: "However, practically an income as low as Rs 10 from online gaming, in the absence of any other income and where TDS has been duly deducted and reported by the operator, may not subject to any interest or attract penal consequences. However, from a legal compliance perspective, reporting the income through ITR filing remains the correct approach to avoid any future discrepancies."

Can you be prosecuted by the tax department if winnings from online gaming are not reported in ITR?
Jhunjhunwala explains that under the Indian Income Tax Act, 1961, there are specific prosecution provisions for non-filing of income tax returns, particularly under Section 276CC.

Jhunjhunwala says: “When a person willfully fails to furnish the return of income as required under Section 139(1) or in response to notices under Section 142(1) or Section 148, prosecution provisions could apply. However, it must be noted that the prosecution applies only in case of willful failure, not mere delay or ignorance. In summary, prosecution is not automatic and it is the last resort - the department considers facts, evidence of willful default, and materiality, before invoking the same.”

Some important aspects about taxation laws about online gaming
The table below shows a summary of some of the important aspects to note about online gaming taxation laws:


Source: Jhunjhunwala and Gupta.

How is the net winnings from online gaming calculated?
Jhunjhunwala from Nangia Andersen LLP explains:

• “Even nominal winnings are covered by Section 115BBJ of the Income-tax Act, 1961, which applies the 30% flat tax rate from the very first rupee. Under Section 194BA, platforms must deduct TDS on "net winnings" as determined under Rule 133 of the Income-tax Rule, 1962, which defines net winnings as withdrawals (plus closing balance) reduced by opening balance and non-taxable deposits.
• CBDT's Circular No 5/2023 dated May 22, 2023, provides a limited relaxation, if the net winnings in a withdrawal do not exceed Rs 100 in a month, TDS may be deferred until winnings cross Rs 100 or, if not withdrawn, until year-end.