Section 135 — Calculation of net winnings from online games for purpose of section 194(1) [Table: Sl. No. 5]

(1) Net winnings from online games during the tax year, for the purposes of section 194(1) [Table: Sl. No. 5], shall be calculated using the followingformula:—
Net winnings = (A+D) – (B+C),
Where,—
A = aggregate amount withdrawn from the user account during the tax year;
B = aggregate amount of non-taxable deposit made in the user account by the assessee during the tax year;
C = opening balance of the user account at the beginning of the tax year; and
D = closing balance of the user account at the end of the tax year.
(2) Net winnings comprised in the first withdrawal during the tax year, for the purposes of section 393(3) [Table: Sl. No. 2], shall be calculated using thefollowing formula:—
Net winnings = A – (B+C),
Where,—
A = amount withdrawn from the user account;
B = aggregate amount of non-taxable deposit made in the user account by the owner of such account during the tax year, till the time of such withdrawal;and
C = opening balance of the user account at the beginning of the tax year.
(3) Net winnings in the formula given in sub-rule (2) shall be zero, if the sum of amounts B and C is equal to or greater than the amount A.
(4) Net winnings comprised in each subsequent withdrawal during the tax year, for the purposes of section 393(3) [Table: Sl. No. 2], shall be calculated usingthe following formula:—
Net winnings = A – (B+C+E)
Where,—
A = aggregate amount withdrawn from the user account during the tax year till the time of subsequent withdrawal including the amount of such subsequentwithdrawal;
B = aggregate amount of non-taxable deposit made in the user account by the owner of such account during the tax year, till the time of such subsequentwithdrawal;
C = opening balance of the user account at the beginning of the tax year; and
E = net winnings comprised in the earlier withdrawal or withdrawals computed under sub-rule (2), or under this sub-rule, during the tax year till the time ofsubsequent withdrawal, if tax has been deducted in accordance with the provisions of section 393(3) [Table: Sl. No. 2] on winnings comprised in suchwithdrawal or withdrawals.
(5) Net winnings in the formula given in sub-rule (4) shall be zero, if the sum of amounts B, C and E is equal to or greater than the amount A.
(6) Net winnings comprised in the user account at the end of the tax year, for the purposes of section 393(3) [Table: Sl. No. 2], shall be calculated using thefollowing formula:—
Net winnings = (A+D) – (B+C+E)
Where,—
A = aggregate amount withdrawn from the user account during the tax year;
B = aggregate amount of non-taxable deposit made in the user account by the owner of such account during the tax year;
C = opening balance of the user account at the beginning of the tax year;
D = closing balance of the user account at the end of the tax year; and
E = net winnings comprised in the earlier withdrawal or withdrawals computed under sub-rule (2) or (4), during the tax year, if tax has been deducted inaccordance with the provisions of section 393(3) [Table: Sl. No. 2] on winnings comprised in such withdrawal or withdrawals.
(7) Net winnings in the formula given in sub-rule (6) shall be zero, if the sum of amounts B, C and E is equal to or greater than the sum of amount A and D.
(8) For the purposes of this rule,—
(a) "non-taxable deposit" means the amount deposited by the user in his user account and which is not taxable;
(b) "taxable deposit" means any amount deposited in the user account, which is not a non-taxable deposit and includes any amount paid directly to the usernot through the user account; and(c) "withdrawal" means any amount withdrawn by the user from any user account.
(9) For the removal of doubts, it is hereby clarified that—
(a) the user account shall include every account of user, by whatever name called, which is registered with the online gaming intermediary and where anytaxable deposit, non-taxable deposit or the winnings made by the user is credited and withdrawal by the user is debited;(b) whenever there is payment to the user in kind or in cash, or partly in kind and partly in cash, which is not from the user account, the provisions of thisrule shall apply to calculate net winnings by deeming that the money equivalent to such payment has been deposited as taxable deposit in the useraccount and the equivalent amount has been withdrawn from the user account at the same time and shall accordingly be included in amount A;(c) whenever there are multiple user accounts of the same user, each user account shall be considered for the purposes of calculating net winnings and thedeposit, withdrawal or balance in the user account shall mean the aggregate of deposit, withdrawal or balance in all user accounts respectively;(d) whenever there are multiple user accounts of the same user, transfer from one user account to another user account, maintained with the same onlinegaming intermediary, of the same user shall not be considered as withdrawal or deposit, as the case may be, for the purposes of deducting tax undersection 393(3) [Table: Sl. No. 2];(e) whenever there is taxable deposit in the form of bonus, referral bonus, incentives, promotional money or discount, by whatever name called, and suchdeposit can only be used for playing the online games and not for withdrawal or any other purposes, such deposit shall be ignored for the purposes ofcalculation of net winnings and shall not be included in amount B or C or D; and(f) whenever any bonus, referral bonus, incentives, promotional money or discount, by whatever name called, is not considered as part of amount B or Cor D under clause (e) and subsequently they are recharacterised and allowed to be withdrawn, they shall be deemed as taxable deposit at the time ofsuch recharacterisation and it shall be deemed that the equivalent amount has been deposited in the user account at that time.