Learn about the tax implications of earnings from Dream11 and My11Circle to avoid penalties under the Income Tax Act.
Nidhi | May 13, 2025 |
Farmer’s Son Makes 4 Crore on Dream11: Won on Fantasy Apps, Know TDS, Income Tax Rules
Mangal Saroj, a son of a farmer from Kaushambi, Uttar Pradesh with only Rs. 39 in his bank account won Rs. 4 crore overnight on Dream11 Fantasy App.
Many people make money using fantasy cricket apps like Dream11 and My11Circle during the IPL season. But not many people know that the money they earn from these apps is subject to taxation, and they can get into trouble if they do not report it to the income tax department.
The money earned from lotteries, online games, and sports betting is treated as casual income when it comes to tax implications. As per the Income-tax Act of 1961, casual income refers to income that is earned irregularly and not on a regular basis. This type of income is unpredictable and is usually earned without any planned or organised effort by the person receiving it.
Therefore, as per Section 56(2)(ib) read with Section 2(24)(ix) of the Income Tax Act, this type of income falls under the head income from other sources. When filing your income tax return (ITR), you need to report these earnings under the “income from other sources” section.
An expert explains that casual income is taxed at a flat rate of 30% under Section 115BB/115BBJ of the Income Tax Act. The rate depends on the source of the income. In addition to the tax, a surcharge and health and education cess are also applied to this special rate.
As per the Income Tax Act, Section 115BB applies to income from activities like winning lotteries, crossword puzzles, races (including horse races), card games, and other types of gambling or betting. Section 115BBJ is applicable to earnings from online games.
As per an expert, winnings from online gaming and betting apps are taxed on a gross basis. The basic exemption limit does not apply to casual income. Therefore, even if your overall income, excluding earnings from online games and fantasy sports, is below the exemption limit, you still need to file an ITR to pay tax on the casual income.
Along with this, Tax Deducted at Source (TDS) also applies to casual income. As per an expert, TDS is applicable to these winnings under Sections 194B, 194BA, and 194BB of the Income Tax Act at 30% if the winnings amount is more than Rs 10,000 per transaction. The Rs 10,000 limit is applicable only under Sections 194B and 194BB. There is no limit for TDS under Section 194BA for winnings from online games.
There is no deduction available for any expenses or allowances from income earned through online games or similar sources. Therefore, taxpayers cannot claim deductions under Sections 80C, 80D, and others for casual income, neither in the new tax regime nor in the old tax regime.
Therefore, it is important to report all your casual income correctly and pay the right taxes to avoid penalties and legal issues.
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