Mangal Prasad, a plywood factory worker, won Rs 4 crore through Dream11, a fantasy sports platform, after paying only Rs 39 entry fee during the IPL match between Punjab Kings and Chennai Super Kings on April 29.
The 30-year-old who hails from Ghasi Ram Purwa village in Uttar Pradesh's Kaushambi district will, reportedly, not be able to take home the entire amount of Rs 4 Crore.
If the winning amount is Rs 4,00,00,000 then under Section 115BB, the applicable Tax Rate is 30% flat. This amount is subject to Rs 1.56 crore worth of TDS deductions by Dream11 under Section 194 B. The net payout to the winner is Rs 2.44 crore. Surcharge and Cess bring the total effective tax to around 39%.
Dream 11 winnings and prize money derived from platforms like these are classified as " Income From Other Sources" under Section 56(ib) of the Income Tax Act, 1961.
Indian Tax deduction laws make sure that a significant share of the prize money of platforms like Dream11 should go to the government.
Before releasing the prize money, Dream 11 is legally bound to deduct tax at source (TDS) if the prize exceeds Rs 10,000.
This is followed by mandatory tax compliance, which includes filing his income tax return (ITR) for the financial year, reporting the full Rs 4 crore as income. Verifying TDS in Form 26AS, which reflects taxes paid on Mangal's behalf. He also needs to ensure there is no mismatch between the tax credit statement and Dream11's deduction.
Apart from Income Tax, Mangal also paid a 28% GST on the entering betting value. Dream11 deducted Rs 9.92 out of Rs 39 that he paid during the betting. It has to submit to the GST authorities the GST dues which was charged from the amount Mangal played the bet with.
Mangal's story is a reminder that large financial gains come with tax responsibilities. Fantasy sports players and aspiring winners need to understand this taxation process.
