ITAT Bengaluru rejects ₹2.33 crore online-gaming tax demand in Gameskraft player case
The tribunal held that tax on online gaming should be based on a player’s actual net winnings rather than gross wallet credits, deleting a ₹2.33 crore addition after the player recorded a ₹27.99 lakh net loss on ₹2.61 crore of buy-ins.
What happened
Gameskraft Technologies · ITAT Bangalore deleted a Rs 2.33 crore tax addition on a Gameskraft-platform player, ruling that online gaming tax should apply to
Key facts
- Rs 2.61 crore total buy-ins
- Rs 2.33 crore gross winnings assessed by tax authorities
- Rs 27.99 lakh net loss
- Rs 4.32 lakh declared income
- 10% gaming-company commission
- July 23, 2026
Why this matters
For gaming-platform deals, diligence should separate historical wallet-credit tax exposure from post-2023 net-winnings compliance and quantify any open assessments.
What to watch
- Whether the Income Tax Department files an appeal and the outcome at the Karnataka High Court.
- Additional ITAT or High Court decisions on gross wallet credits, deposits, bonuses, and net losses in pre-2023 online-gaming cases.
- CBDT clarifications on net-winnings computation, treatment of promotional credits, and TDS reconciliation under Section 194BA.
- Growth in legacy refund claims, rectification petitions, or settlement activity by gaming players and operators.
- Any renewed regulatory action affecting real-money gaming availability, payments, or state-level legality despite federal tax clarity.
- Review open pre-April 2023 assessments for additions based on gross credits rather than documented net winnings.
- Maintain player-level reconciliations across deposits, buy-ins, winnings, withdrawals, bonuses, refunds, and TDS deductions.
- Assess whether legacy tax provisions, Section 115BB/194B treatment, and post-2023 Section 115BBJ/194BA reporting have been cleanly separated in compliance systems.
- Use the ruling selectively in appeals while avoiding assumptions that it overrides the explicit post-Finance Act 2023 net-winnings framework.
- Prepare customer communications and tax certificates that explain net-winnings calculations and reduce wallet-balance confusion.