TDS and GST-Free Fantasy App: A Game-Changer for Players?

In recent years, fantasy sports apps have gained immense popularity, offering users a chance to use their sports knowledge to win real money. However, many fantasy app players encounter Tax Deducted at Source (TDS) and Goods and Services Tax (GST) deductions on their winnings, which can significantly reduce their overall earnings. A fantasy app that is TDS and GST-free would be a game-changer, creating a more attractive and user-friendly experience for players.

What Are TDS and GST in Fantasy Apps?

1. TDS (Tax Deducted at Source): In India, fantasy app platforms deduct 30% TDS on winnings as per the Income Tax Act. This means if you win ₹50,000 in a contest, ₹15,000 will be deducted as TDS, leaving you with ₹35,000. The deducted amount is paid directly to the government, and players can claim a refund during their annual tax filing based on their income bracket.
2. GST (Goods and Services Tax): Fantasy apps also attract 28% GST on the deposit fees. For example, if you enter a ₹100 contest, approximately ₹15–18 of that fee goes toward taxes, which leaves less prize pool for distribution among winners. This can deter players from participating in high-fee contests.

Benefits of a TDS and GST-Free Fantasy App

1. Higher Winnings: The most obvious benefit of a TDS and GST-free fantasy app is that players can retain a larger share of their winnings. Without the 30% TDS deduction, the reward for success in a contest increases significantly. Similarly, removing the GST on entry fees means more money goes toward the prize pool, enhancing the overall earning potential for users.
2. Appeal to Casual Players: Casual players often hesitate to enter high-stakes contests due to the high tax deductions. A TDS and GST-free app will make it more appealing for these players to engage more frequently, as their potential earnings are less eroded by taxes.
3. Boost in Player Loyalty: Removing TDS and GST could also increase user retention and loyalty. If users feel they are maximizing their earnings, they are more likely to return to the platform. This could lead to a more engaged user base, driving higher participation and potentially leading to more user-generated content in fantasy leagues.

While launching a TDS and GST-free fantasy app may provide significant initial benefits to users, such as higher winnings and lower entry fees, these advantages could be temporary as the user base grows and prize money increases. Here’s why:

1. Increased Prize Pools Attract Attention

As the app gains popularity and more users join, the prize pools will naturally increase. With larger prize pools, winnings over ₹10,000 will become more frequent. According to Indian tax laws, any winnings attract a 30% TDS deduction, which means even if the app starts without deducting taxes, it will eventually have to comply once users start winning substantial amounts.

• Why This Happens: Larger prize pools not only increase the frequency of bigger payouts but also attract regulatory attention. As the app grows, it will become more difficult to operate without implementing the mandatory tax deductions.

2. Government Scrutiny on High Revenue Platforms

When the user base of the app expands and revenue increases, the government may begin to scrutinize the business more closely. Fantasy sports are already regulated under Indian laws, and avoiding GST or TDS beyond a certain threshold can raise red flags with tax authorities. The government relies on GST for indirect taxation on goods and services, and larger platforms often attract additional compliance requirements.

3. Sustainability of Free Tax Models

Initially, offering a tax-free model can help attract more users, as it presents a competitive advantage compared to other platforms. However, as the user base expands and the platform starts paying out large sums regularly, it might no longer be financially sustainable to avoid passing on the costs of GST and TDS to the users.

• Increased Operational Costs: The operational costs of running a large platform also rise as it scales up. To maintain profitability, the company may have to revisit its no-tax strategy, especially if it starts paying high TDS amounts on large winnings or covering GST costs out of pocket.

4. User Shift to Smaller Payouts to Avoid Taxes

To circumvent tax deductions, users might start focusing on lower-value contests where the prize money does not exceed ₹10,000, avoiding the 30% TDS. While this could keep smaller contests thriving, it will also lead to fewer users participating in high-stakes contests, limiting the app’s potential to offer lucrative tournaments.

• Long-Term Limitation: Over time, if high-value contests are consistently taxed and small contests become the go-to, it could limit the app’s growth and reduce its appeal to serious fantasy players who seek big payouts.

5. Transition Plan to Avoid User Dissatisfaction

As the platform scales and larger prize pools are introduced, the app can plan a gradual transition to start implementing TDS and GST deductions. This could be done by initially providing rewards in alternative forms such as vouchers, points, or merchandise to minimize tax impact on cash winnings.

• Communication is Key: It’s important for the app to clearly communicate any changes in the tax structure to users, explaining why these deductions are necessary as the platform grows. By being transparent, the app can maintain trust and avoid backlash when these temporary benefits start to fade.

Conclusion

Although a TDS and GST-free fantasy app offers great initial benefits to players, these perks are likely to be temporary. As the user base grows and prize pools increase, regulatory compliance will necessitate the introduction of TDS on higher winnings and GST on entry fees. For the platform to sustain itself in the long run, it will have to implement these changes gradually, ensuring users are well-informed and that the transition is smooth.

Some of the apps that have been giving free TDS are league 11, Vision 11, Focus 11 . All these app have conditions that these are promotional . Some apps give TDS back as discount points which are basically used for in game contest and can be only used partially .

one thing is that the additional TDS burden on the app can strain the financial structure of the company and will leave lesser amount for marketing and user retention and can backfire for the company. so as long as the TDS free is available players can enjoy a no tax environment of play.