Many Indian casino players have frequently wondered how much of their gambling winnings online they may expect to bring home. On the topic of gambling taxation, industry experts provide simple answers to not so simple questions.
Online Entertainment Winnings Treated as Regular Income
Sitting at home, casual gaming fans have increased the time they spend with their favourite game. Virtual casinos, online streaming platforms and gaming Apps report an increase by at least “20-30%” in most cases. Many of these casual gamblers have never had the experience of winning in online lottery or casino games and, therefore, have never had to pay taxes on such earnings. However, the question has been raised more and more frequently by user groups, since people have used these platforms more regularly in 2020.
A recent analysis on the subject published by the industry insiders at ENV Media reveals that, after all, the rules are not much different from what online desi players are familiar with from their annual tax filings and returns. ENV Media experts have sifter through online gambling taxation laws and regulations and reviewed pertinent legal sources and official publications.
Understanding Indian gambling taxation laws clearly affects personal winning from favourite online games such as Teen Patti or Rummy. When placing an instant Andar Bahar side bet, players do not want to think about whether it’s easy to withdraw the earnings after tax.
The bottom line is that the Income Tax Act (ITA) defines any income from “lottery, crossword puzzles, [horse] races, card games or any [other forms] of gambling or betting”, wherever legal, as taxable by the State. The Finance Act and the ITA both specify a flat 30% tax on any such income or winnings.
How Do You Pay Your Taxes on Online Gambling Winnings? Where and When? Are There Exceptions or Limits?
Here are some more details on the procedure of claiming online gaming earnings after tax:
- all Indian players should link their Aadhaar/PAN Card to legally claim earnings after tax;
- despite gaming being considered an investment, losses are not tax-deductible;
- federal taxes are Central prerogative – therefore, it is not uncommon that online operators will withhold directly the flat tax from your earnings.
Actually, Tax Deducted at Source (TDS) has become both a trustworthy policy of quality Indian online casinos, as much as it is a relief for players. The platform operator will probably take care of tax requirements for you so you can claim your net legal income safely.
It is important to remember that, on the other hand, if not taxed on the spot, winnings should be declared under the proper category in one’s income tax forms.
Surcharges, Non Taxable Minimum and Transfers of Online Gambling Earnings
The non-taxable minimum on gambling winnings is an important parameter. TDS may be applied by your favourite casino on anything above INR 10,000, never below.
There are, however, some surcharges to those 30% flat tax. Taxation on payments to winning players is often increased by the Health and Education Cess, set at 4%. Thus, the total flat tax becomes 31.2%.
For those of you lucky enough to worry about upper limits, here are some the precise figures:
- Withdrawing gambling earnings that exceed INR 50 Lakhs can also come with a surcharge of 10% applicable to the above normal tax rate, making it a total of 33%.
- For winnings in excess of INR 1 Crore the surcharge becomes 15% of the tax rate, effectively raising it to 34.5%.