March 07, 2024

Income Tax & Online Betting in India Explained

Online betting in India is a topic that has been heavily debated, time and again. Whether it is sports betting or casino games like roulette, slots, or poker, online gambling in the country has always been a subject of great speculation.

Whether it is the legality of it or the simple question of how much winnings do you get to keep, all of it is frequently subjected to great contention and disputes.

Income Tax & Online Betting in India Explained: eAskme
Income Tax & Online Betting in India Explained: eAskme

Other people are at: How The COVID Pandemic Changed Sports Gambling

That said, we are going to clarify the matter of taxation on winnings from online betting in this article.

What does the Law Say?

If we were to talk about the legality of online gambling, the outdated Public Gaming Act of 1867 is what comes to the mind. While this set the foundation for gambling laws, it does not speak about online gambling at all.

To put it differently, it is quite a bit of a grey area. Many have deduced from this that since online betting is not mentioned in these Indian betting laws, it is not legally prohibited.

In fact, the Indian Government has left it to the states to decide and formulate their own laws when it comes to online betting in India. That’s why we have a few states in the country where it is next to impossible to access sports betting sites and then some, where you can easily sign up and start betting with international operators.

That said, when it comes to the matter of taxation, there are a few laws that have explicitly laid down the rules for taxing the winnings from online gambling. These laws are mentioned in the Income Tax Act - Section 194B and Section 115B.

How much Tax to Pay in Online Betting in India?

As seen, the legality of online gambling is a grey area, but the question of winnings emerging from those activities has been addressed in clear terms in the Indian Laws.

To put it broadly:

A flat 30% tax will be placed on all winnings emerging from online betting and gambling activities.
An education cess may also be added to this, taking the total taxation up to ~31.2%.

For example, if you were to win Rs.1,00,000 in the fiscal year from sports betting, then you are liable to pay up to Rs.31,200 in taxes.
With these, there are also a few surcharges to the tax rate, depending on how much you win.

Disclosing your Betting Wins in your Tax Returns

Some operators may deduct the tax at the source itself, commonly known as TDS. In this case, you need not worry about paying your taxes since it’s already deducted.

However, if the TDS practice is not followed - which is the case for a majority of the operators, you will have to declare the same as other income while filing your tax returns.

This is absolutely important - be sure to disclose your online gambling winnings when filing your income taxes so you can pay the respective tax on it. This is just like revealing your earnings from investments and other sources that you may have. Otherwise, you may end up receiving a notice from the Income Tax department.

In other words, whether you are making your money from betting legally or illegally, your winnings from the same will be subject to taxation.

What do you think? Do you have any questions or suggestions?

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