ITAT Bengaluru says online gaming tax must be based on net winnings, not wallet credits
In a case involving Gameskraft’s Rummyculture and Gamezy platforms, ITAT Bengaluru rejected tax on ₹2.33 crore of gross wallet credits after finding the player had a ₹27.99 lakh net loss on ₹2.61 crore in buy-ins.
What happened
Gameskraft Technologies Pvt. Ltd. · ITAT Bengaluru ruled online real-money gaming tax must be based on actual net winnings, not gross wallet credits, in a case
Key facts
- ₹2.61 crore total buy-ins
- ₹2.33 crore gross winnings
- ₹27.99 lakh net loss
- ₹4.32 lakh declared total income
Why this matters
Strategic buyers and partners may view compliant real-money gaming assets more favorably if the decision establishes a scalable net-winnings tax framework across the industry.
What to watch
- High Court or Supreme Court appeal, stay, or affirmation of the ITAT decision.
- CBDT circular or legislative amendment addressing treatment of buy-ins and wallet credits.
- Similar rulings involving other real-money gaming operators or individual players.
- Changes in platform TDS policies, withdrawal limits, tax certificates or wallet-ledger disclosures.
- Evidence of reduced tax notices, settlement provisions or provisions reversals at listed gaming-adjacent companies.
- Monitor whether the Income Tax Department appeals the ITAT Bengaluru order and whether any stay is granted.
- Review player-wallet accounting to separate deposits, recycled stakes, promotional credits, winnings and withdrawals.
- Build tax reporting around periodic net winnings and auditable buy-in offsets rather than gross wallet movements.
- Expect major gaming platforms to use the precedent in pending assessments, refund claims and customer-facing tax communications.
- Assess whether lower effective tax exposure supports higher player retention, deposit frequency and promotional spending.