Winnings from lottery and gambling such as poker are subject to tax. Casinos that accept Indian players are required to report tax files to ensure they comply to all taxable incomes. India imposes TDS to all winnings from gambling. TDS stands for Tax Deduction at Source, under section 194B of the Income Tax Act, winnings from lotteries and games have a corresponding TDS of 30% provided the amount is at least Rs. 10,000. In poker, aside from TDS of 30%, an additional 0.9% is included as Education cess tax. Hence, the grand total tax for poker winning is 30.9%.
Is all poker winning amount taxable? No! A tax will be deducted from your winning if the total amount is over Rs. 10,000 in a single game. For online poker, the tax is automatically deducted from your winning. So once you receive the payout, you will no longer be required to pay for other taxes. However, if TDS is not deducted from your winning, you will be obliged to file for 30.9% income tax within 30 days after receiving the amount.
How to calculate TDS?
In relation to Indian Taxation Law, no TDS (Tax Deduction at Source) will be deducted if the deposited amount is more than the cashout by an Rs.10,000 difference. What are the scenarios where TDS is deducted? If a poker player deposited Rs. 15,000 and only uses a portion of that, take, for example, only Rs. 4,000, and the player wins Rs. 13,000. The total cashier balance would be Rs. 24,000. If you want to withdraw your remaining balance of Rs. 24,000, there will be no tax deduction because you haven’t used all your funds, but a 30% TDS will be deducted from your winning amount, which is Rs. 13,000.
TDS Certificate – The importance of Tax Deduction at Source Certificate
If you are playing at online casinos, TDS will be automatically deducted from your winning if the winning amount exceeds Rs. 10,000. However, it is important to note that when the casino deducted a TDS, you have to ask for a TDS certificate, as it will serve as your proof and protection. There were instances before when the online casino site failed to provide a TDS certificate but deducted tax. There were also instances when no TDS were deducted, but later on, the online casino was asked to submit TDS on the player’s behalf from its budget. Therefore, the TDS certificate is crucial as it serves as protection for both the online casino and the players.
Casino players should also be wary of promotions and campaigns. Some online casinos wave off the TDS as part of the promotion but won’t provide a TDS certificate. It is a red flag as such is most likely involved in illegal practices. Once you get caught dealing with these casinos, you will be held liable and accountable to the law. Both the casino sites and the player will be persecuted and could spend jail time and fines.
If you are a casino player in India, be it in online casinos or land-based casinos, you should make it a habit to ask for a TDS certificate for your winning over Rs. 10,000. TDS deductions can be accessed in form 26AS, which you can use later when filing income tax. Always keep in mind that ignorance of the law excuses no one. So, you have to know these things beforehand for your own safety.