India’s iGaming market has been booming in the last few years. With several domestic poker and rummy sites, cash-based fantasy sports games, and international casinos currently available in India, it seems like speculative income can be on the rise for many Indians.
Due to the way Indian laws are structured, most online casino sites in India are controlled by international companies instead of companies based in the country.
Given this situation, the income tax obligation of the winnings falls on the player since it is not possible to deduct the tax at source via TDS.
How are Online Casino Winnings Taxed in India?
According to Section 115BB of the Income Tax Act 1961, any winnings from lotteries, race betting, crossword puzzles, card games, and other gambling games would be taxed at a flat rate of 30% if it exceeds ₹10,000 in a financial year.
The winnings are calculated independently of the individual’s total income and taxed at 30% instead of added to the total taxable income.
Sites based in India can automatically deduct the taxes via TDS, which means the individual will not have to worry about tax compliance and just use the TDS receipt while filing their return.
For people who play on international casinos, it is vital to keep track of your winnings. In case the winnings in a financial year exceed ₹10,000, they are liable to declare that income in their next return and pay a flat tax rate of 30% on the winnings.
This rule applies to all forms of gambling winnings, including online casinos, poker sites, lottos, cash-prize games, etc.
Additionally, depending on the quantity of the winnings, there might be additional surcharges applicable. For winnings above ₹50,00,000, the effective tax rate is 33%, and for winnings above ₹1,00,00,000, the tax rate if 34.5%.
Like all forms of income earned in India, gambling income is subject to a 4% surcharge for “Health and Education Cess.”
Don’t forget to file your returns!
If you get lucky enough to win a significant amount on iGaming platforms, it is better to keep track of everything and ensure your taxes are filed diligently. Income tax fraud can lead to severe fines and possible jail time.