In the past decade or so, the online gambling and betting sector in India has witnessed a massive increase in the number of players.
This may be a direct result of millions of Indians getting access to high-speed internet connectivity at relatively affordable costs, allowing them easy access to online casinos that were previously quite inaccessible.
While Indian-owned online casinos still remain illegal in most states of the country, international online casinos have found ways (legal loopholes , that is) to offer their products to Indian players in a legal way.
In simpler terms, it is not illegal to play online casino on sites owned by licensed offshore companies.
And with the inclusion of UPI and netbanking as prominent payment methods on most casino sites of repute, it is super easy to indulge oneself now more than ever.
However, for someone who plays online casino games , it is very important to be aware of the taxes that the winnings from an online casino attract. Because yes, your casino gambling winnings are taxable.
All the money that one makes from an online casino is considered a part of their annual income. This income is completely taxable in all the states of India. Any and all casino or betting income must be declared under the heading “Income from other sources” in your annual tax report.
Section 115BB of the Income Tax Act details how the income earned on winnings from betting, casinos, and similar sources is taxed.
Winnings from online casinos are taxed at a flat rate of 30% regardless of the tax bracket the person in question falls under. No exemptions are applicable in this scenario. You are legally obliged to declare these earnings during your annual tax filing.
Another important thing to note is that an additional cess is levied over and above this tax. The cess is set at 4% and it is added to the due tax payable by persons whose income is liable for income tax.
As per the tax laws in India, additional surcharges are applicable to winnings of more than INR 50,00,000. This means that high-roller wins attract heavier taxes.
Winning amounts that are more than even 50 lakh rupees get levied a surcharge of 10% over the normal rate. That makes it 33%, excluding cess.
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For gambling sites that are allowed to legally operate and pay taxes in India (game of skill sites such as Indian rummy or poker sites), the tax amount is deducted automatically when the player withdraws their winnings from the site. This is done as part of the TDS policy.
However, for offshore online casinos (internationally owned) with no legal footing in India, the player can withdraw the full winning amount without any deductions. This means that the casino player alone is liable for disclosing the winnings as income on their annual tax report.
It is of extreme importance that you pay your taxes on time if the taxable amount was not deducted at the source (while withdrawing your casino winnings, that is). This will help you dodge trouble with the tax department.
