Over the last 10 years, the online casino industry has seen a huge evolution. With the increase in legal and secure online casino websites, online gambling has become extremely popular in India. Players can now win real money on these online casino sites.
According to a recent report, 40% of Indians engage in some form of gambling. With millions of Indian players on these online casino sites, this industry is sure to generate some good revenue for the government in the form of taxes. Any income earned from online casinos is fully taxable in India.
The income earned from online casinos comes under the heading “Income from other sources”, which you can find on your annual tax report. The particulars regarding the tax attracted on this income are covered under section 115BB of the Income Tax Act, which includes income earned on winnings from betting, gambling, card games, and similar sources.
Winnings from online casinos are taxed at a flat rate of 30%, excluding cess. The net rate after cess amounts to 31.2%, without any benefit of exemptions. The cess is set at 4% and it is added to the due tax payable by persons whose income is liable for income tax.
N.B: Cess is a surcharge for health and education imposed by the government. Hence the ultimate rate of tax for casino winnings in India becomes 31.2%.
All reputed online gaming operators deduct this amount from winnings in the form of TDS (Tax Deducted at Source). Even though the player receives the winning amount post tax deductions, the taxpayer has to show this income while filing the Income Tax Return.
In addition to this tax, there are some surcharges depending on the income group as well. If the winning amount exceeds Rs.50 Lakh, a surcharge of 10% is applicable over the normal rate. That becomes 33%, excluding cess. After including cess the total tax rate amounts to 34.32%.
If the winnings exceed Rs.1 Crore, the surcharge is 15% on the normal rate of 30%, excluding cess. Post addition of cess, the total tax rate comes to 35.92%. However, most online casino sites do not allow players to put such large amounts of money at stake, in the interest of player safety.
Remember, you must report your income from online betting and gambling when filing your income tax returns (ITR).
To bet legally and to keep tax worries at bay, you must disclose the exact income you have made using an online casino when filing your annual tax report.
In summary, income from online casinos is taxable in India. With the technological advancements, online casinos have made it possible for players to bet legally and securely ensuring full compliance with the income tax laws.
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