Government Specified TDS Law
Under Section 194B of the Income Tax Act, 30% tax is deducted on any prize money in excess of Rs 10,000 and other winnings from games, lotteries etc. This is deducted at source (TDS).
What has Changed
Starting April 2019, we will be introducing a dual chip system which will be the most effective way to manage the TDS on Dangal. A player will have 2 wallets in their account, Player Wallet and Poker Chips wallet.
Player wallet, which acts like a player bank account
Poker chips, which is used on cash tables/ tournaments
The player wallet is similar to a playerâ€™s bank account and will be used for deposits and withdrawals on the platform. The poker chip wallet is the wallet to be used for buy-ins for cash games or tournaments on the platform.
A session is defined as a period between two successive conversions from the poker chips to the player wallet.
A user can deposit any amount to their player wallet (using any of the payment gateways). A player can choose to then convert any amount from the player wallet to poker chips to play their favorite cash games or tournaments. A player can convertany amount, any number of timesfrom their poker wallet to poker chips and vice-versa.
Players can convert their complete Poker Chips to the Player Wallet. TDS is applicable on the winnings (Withdrawal minus cumulative deposit in one session) above 10k in a single session is taxable as per the regulations. Players will get the advantage to offset their buy-ins made from Player Wallet to Poker Chips. Only complete conversion of the poker chips is allowed and partial conversions canâ€™t take place. The money in the player wallet is available for instant withdrawal and there are no taxes to be paid for transfers from this wallet to the bank.
Here are a few examples to better explain the concept of a dual chip system and its benefits for calculating TDS
Player X deposits Rs10000 using his credit card. His Player Wallet now shows Rs. 10000 balance.
He convertsRs. 5000 to his Poker chips.
He plays a tournament and loses all his chips.
He converts another Rs. 2000 from his Player Wallet to Poker Chips.
He plays at the cash tables with those 2000 Poker Chips and wins 40,000 chips.
He again joins a tournament and loses 6000 chips.
Now he requests a withdrawal from his Poker chips
His current Poker chips is 34,000
His cumulative deposits from Player Wallet to Poker chips are 5000 + 2000 = 7000
His winnings are 34,000 - 7000 = 27,000
TDS applicable = 30% of 27,000 = 8,100
So, 18,900 (= 27,000 â€“8,100) will be added to his Player Wallet.
His Player Wallet already had 3000, so it now becomes 21,900
User can cash-out any amount up to 21,900 to his bank account, or move any part of that back to his Poker chips to play again.
A few things to note
After every successful withdrawal from the Poker chips, it becomes a clean slate. Multiple deposits can happen from Player wallet to Poker chips between withdrawals, and the cumulative total (sum of all such deposits) will be considered as the deposit value while calculating taxable winnings
Transfer canâ€™t happen from Poker chips to Player wallet if the player has any balance on a cash table or has registered for any tournament which has not yet started.
Any bonus chips given to the user are directly credited to the Poker chips and are not considered to be part of the userâ€™s deposit amount. To take an example:
User X deposited Rs5,000 from his credit card to his Player Wallet.
He then transferred this 5,000 to his Poker chips.
PokerDangal gave him 1,000 bonus chips in his Poker chips.
He played with the 6,000 chips, had a good run, and ended up with 20,000 chips. He then decided to withdraw those funds
Winnings = Final balance - Deposits = 20,000 - 5,000 = 15,000. Note that the 1,000 is not included in â€œDepositsâ€. TDS is calculated as 30% of Winnings (=4,500) and the balance 15,500 is credited to his Player Wallet and is available to be freely withdrawn to the Userâ€™s bank account.
The PokerDangal support team is available to clarify any doubts and we are always happy to receive feedback on how we can better improve our policies to provide the best poker experience to our players.