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Are Casino Winnings Taxable in India?

Casino - gambling - Taxscan

A casino is a public room where gambling is being held. In India, the Public Gambling Act of 1867 prohibits running or being in charge of a public gaming house or a ‘Casino’. The penalty for breaking this specific law is a fine of up to  Rs.200 or imprisonment of up to 3 months. Additionally, this Act prohibits visiting gambling houses. The penalty for visiting a gambling house is a fine of Rs.100 or imprisonment of up to one month. Out of 29 states and 7 UT, only 3 states allow casinos as legal, Goa, Daman & Diu and Sikkim. There are many online casinos in India working from allowable states and also from abroad.

Why govt. make limitations on casino gambling is a question, gambling is a game of possibility. If he wins the game he gets money but that is a possibility if he loses all his money will lose. Sometimes people don’t realize their bets and risks. They always think that they are doing it as leisure. The fun of the games never leaves the person. No person can always win in a casino, that is why it ultimately drains the people’s savings to land in the hands of a few owners. From govt. point view, Casino gambling involves too much money usage at a place thereby increasing the risk of crime, blackmailing, the formation of underworld gangs, extortions, which is not good for the law and order of the area. It is very expensive. The casino makes economic imbalance in society. It makes some people rich and some people poor.

The tax laws regarding casinos in India are uncertain, they are comprehensive gambling laws. Now the law allows in some states, and only one state has launched online casinos. And there is no special mention about online casinos in laws. Taxes are applied to casino winnings. Tax laws levy a tax rate of 30% on any winnings from casinos, lotteries, crossword puzzles, races, card games and more (basically, any form of gambling or betting). Offshore casino operators are supposed to withhold tax of 30% when making payments to winners if the winnings exceed INR 10,000 (which equates to GBP 115).

In July 2017, GST introduced. This is indirect taxation system. That brings change in casinos also. The imposed tax bracket is intended to have multiple benefits, including uniformity of rates, ease of implementation and higher revenue efficiency. Taxes on lottery, betting and gambling winnings are being subsumed on the state level.

The GST system has several levels in place. Casinos and betting operators are at the highest level—28%. Government officials believe it is only fair that casinos are part of the most expensive tax bracket, as entertainment and luxury taxes are merged with service taxes under the GST. There is another category of casinos, online casinos. The online casinos are not part of this. Online casinos are under, “all other services not specified elsewhere”, and any such activity that falls within this category is subject to an 18% rate.

Still, the tax system is not correct about this, whatever 28% is the tax which is levied on the casinos. Online casinos levied by the same.

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