The online gambling and gaming industry in India has blown up in recent years. And with the global pandemic and lockdowns during 2020 made it all the more attractive to sit at home and play for money online through apps and betting sites.
Online gambling enjoys a grey existence outside the purview of Indian law – while most Indian states have prohibited gambling and betting in physical gambling houses, almost no Indian state, with perhaps the exception of Andhra Pradesh, has put an explicit ban on online gambling. Thus, online gambling is neither illegal nor legal, allowing online apps and betting sites to manipulate this rather convenient loophole.
So technically, an Indian citizen can freely bet online and earn some extra cash while doing so. However, there are still some more considerations that you must keep in mind before you can safely use betting sites in India.
Indian online gambling may not be prohibited by the Public Gambling Act of 1867, but there is still the FEMA to consider. FEMA or the Foreign Exchange Management Act does not allow anyone but authorized partners to exchange other currency into Indian rupees or vice versa. That is precisely why Indian users must be wary of using offshore betting sites that do not accept Indian rupees.
While you may be able to deposit on such betting sites, withdrawing money from them is another story altogether. That’s why we recommend you to only use legal betting sites such as Betway or Bet365, which deal in Indian rupees. That means that you can deposit and withdraw in Indian rupees, without having to worry about FEMA.
Now that you have begun gambling online, there’s a good chance that you’ll end up winning something or the other. Whether through online casinos or through sports betting sites, any winnings that you withdraw are all considered taxable income.
Income from any such online gaming apps or websites must be declared under Section 115BB of the Income Tax Act of 1961. Under Section 115BB, “tax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever” will amount to a flat rate of 30%.
Moreover, no exemptions or allowances can be made in terms of income from online gambling or igaming apps. Therefore, regardless of the income status of the winner or any of their expenses, they must pay 30% income tax on their total winnings.
The organizers such as betting sites may also deduct the TDS before crediting the account of the winner. This is done in case the number of winnings exceeds 10,000 INR. However, in case the organizer does not deduct TDS beforehand, the user may just declare the income and pay the requisite income tax.
With the explosive growth of the online gambling industry in India, it is the need of the hour to have formal legalization and regulation of the industry. With an estimated turnover of 120 billion dollars by the year 2023, the Indian government is sorely missing out on opportunities of earning quite a hefty amount of revenue by regulating the igaming empire.
However, as and as betting sites become more prevalent in India, the dream of full acceptance of the industry is not too far into the future.
