As the deadline for filing income tax returns in India looms closer, many people are rushing to file their ITRs this month. The Central government has extended the deadline to December 31, 2020, and all taxpayers—yes, even online gambling players—need to submit their forms by that date, or a hefty fine awaits them. This doesn't include players who gambles at off-shore casinos such as a 10Cric Casino.
Tax on online gambling wins in India—what’s the rule?
India’s tax rules covering gambling—both for land-based venues and online casinos—are still unclear. The outdated Public Gaming Act of 1867 sets up the foundation of gambling levy requirements and categories; however, there are several legislative acts that also serve as the basis of the Indian gambling taxation.
Section 115BB of the Income Tax Act of 1961, which regulates the income tax of India, specifies that any winnings from lotteries, crossword puzzles, race betting, card games such as Andar Bahar, Teen Patti and online rummy and other games, as well as gambling or betting of any form or nature is taxed at a flat rate of 30%.
This tax rule is applied to all online gambling winnings regardless of an individual’s total income, and no exemptions are made.
Reputable online gaming operators charge a 30% TDS (tax deducted at source), which means that players no longer have to worry about figuring out and paying the tax on their online gambling winnings. So a word of warning: if a platform promises “full amount” payment of online casino winnings, that means the gamer is tasked with the burden of declaring his or her winnings via the correct annual tax form.
What about GST for online gambling?
In 2017, central and state governments in India adopted the standardized goods and services tax (GST), which places a 28% tax rate for all entertainment events and services including casinos, racecourses as well as their related services.
In a new research report, ENV Media described GST as India’s equivalent of Value Added Tax (VAT). It explained, “In general, however, players should not think about this tax much, as it is the registered supplier of goods and services that will need to pay the GST… Yes, it does affect the money a player puts in (before) they win; and it does decrease their return in purely statistical terms. But it is an indirect tax which is already included in the final product they purchase when they play.”
Are there direct surcharges for gambling winnings?
In addition to the universal 30% tax on gambling income, there are a couple of surcharges and tax conditions depending on the income groups.
For instance, gambling winnings that exceed INR 50 lakh have a surcharge of 10% applicable to the normal tax rate—for a total of 33%. Meanwhile, gaming income exceeding INR 1 crore—such as in the case of lottery winnings—incurs a surcharge of 15% of the normal tax rate, bringing the total to 34.5%.
There’s also a 4% surcharge for “Health and Education Cess,” which is added to the due tax and does not depend on income.
