Do You Have to Pay Taxes on Casino Winnings in India?
Yes, you have to pay taxes if you win ANYTHING above 10,000 INR – regardless of its source, i.e. online or offline. These winnings need to be declared in the tax form that is filled yearly.
The Income Tax Act of 1961 mentions that all the Real Money Games are subject to 31.2% tax. Interestingly, this includes card games, betting on sports, lottery, crossword puzzles, and more.
Even though India has a federal government structure, the taxes on gambling are imposed by the central government, so they’re uniform throughout the country.
Not reporting winnings may result in heavy fines, penalties, and legal trouble – so it’s best to declare the winnings and pay taxes.
What Winning Amount Do You Have to Report in India?
Regardless of the operator’s location, players have to declare all their real money winnings in the annual tax forms. Resident and non-resident (in case the winnings come from India). Every winner, who has won a reward of more than 10,000 INR, needs to pay the 30% tax.
Casinos and other related entities that legally operate in the country, usually cut 30% TDS (Tax Deducted at Source) before the rewards get to the winner. Operators based overseas do not have to pay taxes to the Indian government.
Is there any surcharge on casino winnings?
The tax structure in India is progressive, this means ‘the more you win, the more you pay’. This applies to winnings from casino, lotteries, betting, and all the real money games.
While winning a multi-million jackpot is a rare occasion, the winner might fall into the high-income slabs, and this attracts direct surcharges.
Depending on the amount won from gambling, here’s what the surcharge looks like:
- Over 50 lakhs – 10% surcharge (the total tax would be 33%)
- Over 1 crore – 15% surcharge (the total tax would be 34.5%)
Further, winners also have to pay a surcharge known as ‘Health and Education Cess’ of 4%, which takes your total tax to 31.2%.
Are there any indirect taxes on casino winnings?
Yes, the GST (Goods & Service Tax) is applicable on casinos, sports betting, etc., under the ‘entertainment’ category. However, players and winners need not worry about this tax, since it’s for the operators.
As far as operators are concerned, currently there have been debates about increasing the GST to 28% for games of skill as well as games of chance. Further, the tax may be charged on the Gross Sales Value rather than Gross Gaming Revenue. This decision is still being debated and reviewed.
In any case, players need not worry about the GST, as they do not have to deal with it (at least directly). The ‘VAT’ is already added to the final price of the products and services offered by the operator.
How and Where to Report Your Winnings in India?
Thanks to the COVID-19 pandemic, most of the give and take happens online – so your income tax can be filed online before the financial year ends.
As a prerequisite, you will have to link your Aadhar Card and PAN Card. The casino winnings are to be declared under “Income from other sources”.
- You can approach a Chartered Accountant or Tax Consultant to do the job for you
- You can file for taxes yourself through the government portal (if you know how to)
- In case your taxes are already deducted at source, keep a proof, that is, the receipt
In case of offshore casinos, the TDS is not deducted, and players receive the full amount of the rewards. Now, even though this is not really trackable, the responsibility lies on the winner to report the winnings honestly and pay the taxes. It is advisable to pay the taxes to avoid legal complications with the tax authorities.
Note that your losses cannot be claimed as they are not tax-deductible.
Another note – Rewards above 10,000 INR are taxable at the rates discussed above.
For full details, check out the section 115BB of the Income Tax Act.
Big Rewards = Big Taxes
Here’s the thing – the tax rules are a little outdated. However, they are generalized and ‘all-encompassing’. As they’re central laws, they’re uniform throughout the country
Let’s recap everything we’ve learned so far:
- Winnings above 10,000 INR are taxable and need to be declared in the annual tax form
- Depending on the amount won, there can be an additional surcharge
- In case the winner receives the entire reward amount, it’s the winner’s responsibility to report the rewards and pay taxes
- Losses incurred while gambling are not tax-deductible, and hence cannot be claimed
On that note, we want to add that it’s necessary to play at fully licenced and regulated casinos.
Why?
Because it avoids unnecessary trouble. Reputed casinos are less likely to get you into trouble or default on payments. You can seek legal help if you’re scammed.
We have compiled a list of some of the top-rated casinos, that are licenced. You can check out our unbiased reviews before you bet on it!