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Taxation of Casino Winnings for Indian Gamblers

By Taxscan Team -

Casino play continues to be hugely popular in India. Even though only the states of Goa, Daman, and Sikkim have legalized land-based casinos, many people choose to play at casinos online. This is the case despite the fact that the legality of online casino gambling is a grey area. The government is yet to regulate the activity and this does not seem likely to change in the foreseeable future.

The continuing growth in casino gambling in India has led to more interest from casino brands. This includes Showlion, a dedicated brand for the region. The brand is one of many reputable online casinos that provide the opportunity for players to achieve good wins. For any player that wins at a casino, it’s important to understand the tax implications.

Declaring winnings from a casino

Normally, any casino winnings have to be reported. This includes winnings from recreational gambling such as taking part in a lottery, betting on horse racing and playing at a land-based or online casino.

The casino or gambling establishment may deduct the tax payable at the source. This means that the winnings which the player receives may already have had the tax deducted. If this is not the case, winnings need to be declared when the individual who is registered for tax completes a tax return.

The tax that is paid on winnings from any form of gambling is covered by Section 194B of the Income Tax Act. Any winnings that a person is lucky enough to get are subject to a 30% tax. There is also a surcharge of 10% of this tax. There are no deductions or exemptions which can be applied to the tax.

Winnings outside of India

When a player wins more than INR 10,000 at an offshore casino, the casino operator should withhold 30% of the winnings for taxation purposes. However, this does not mean that the individual will not still have to pay local taxes as well. This applies if a person is considered to be a resident of India.

If the winnings are made online, the player can simply transfer the money into their bank account. However, if someone wins money in a land-based casino outside of India they are only allowed to carry a certain amount of currency back into the country. Usually, the maximum amount of foreign currency that a person is allowed to carry into the country is US$5,000. If a person wins more than this, they have to report the excess to customs.

It’s likely that the popularity of casino gambling in India will continue to grow.  With this in mind, it’s important that players understand the tax implications of winning. They need to ensure that the full applicable rate of tax is paid on any money that they win. This is obviously going to greatly reduce the size of the win, especially given the fact that there are no deductions or exemptions for people to benefit from.