Tax On Poker Winnings In India
There is also a 2% education cess and 1% Secondary and Higher Secondary Education Cess on this 30% tax. This brings the total tax on game show winnings to 30.9%. But beginning with the tax year 2018 (the taxes filed in 2019), all expenses in connection with gambling, not just gambling losses, are limited to gambling winnings. What About State Taxes? In addition to federal taxes payable to the IRS, many state governments tax gambling income as well.
One important question that people have asked me is whether winnings from casinos and betting can be taxed and if so what would be the quantum of tax to be paid.
The answer to this question lies in Section 115BB of the Income Tax Act which lays down the rate of tax for winnings of any lottery, card games, horse-race, crossword puzzle or any other gambling or betting activity to be thirty per cent(30%).
Further, in terms of Section 194B of the Income Tax Act, for any prize of more than ten thousand rupees , tax has to be deducted at source (TDS) by the person awarding the prize.
Again it must be noted that since for the purposes of computing taxes, there is no difference between a legal and an illegal activity. Thus even illegal betting and gambling winnings would be liable to be taxed under this Section.
Also, though remittances for the purpose of gambling are prohibited under the Foreign Exchange Management (Current Account Transactions) Rules, 2000 (Schedule I), since no action is taken against betting and gambling on foreign gaming websites through Indian bank accounts, any winnings remitted in Indian bank account though illegal could still be taxed at the rate of 30% under the Income Tax Act.
Additionally it would again be reiterated that if gambling winnings are remitted in India from abroad, one could face penalties of up to thrice the remitted amount under Section 13 of the Foreign Exchange Management Act (FEMA) 2000.
Levies and taxes for casinos
Casino operators in Goa (both onshore and off-shore) have to pay a fee of 10% of the total value of chips sold or receipts from gaming machines. Additionally, offshore casinos have to pay a tax of Rs. 2000/- on admission of one person, while onshore casinos have to pay a Rs. 500/- tax on an individual’s entry.
Other than these levies, according to a Firstpost report, the Goa government charges a Rs. 5 crore/ year license fee per offshore casino.
Casinos in Sikkim have to pay a Rs. 5 crore fee for obtaining a five year license. Additionally they also have to pay a tax of 10% (or Rs. 1 crore, whichever is higher) on the total gaming revenue. The tax rate gets enhanced to 15% from the third year of operation of the casino.
The current tax laws regarding casino winnings in India are a little vague, as are the overarching gambling laws. As things stand now, Indian gambling laws permit brick-and-mortar casinos in a few states. Only one state has launched an online casino. The rest of the online casino action is distributed amongst licensed offshore operators. Due to the outdated nature of online gambling laws, there is no specific mention of online gambling, meaning it is legal for residents to participate in.
Taxes are commonly applied to casino winnings throughout the world. The status as taxable income serves as a means of regulation. As far as the actual percentage, this number has shifted over the years. Tax laws levy a tax rate of 30% on any winnings from casinos, lotteries, crossword puzzles, races, card games and more (basically, any form of gambling or betting). Offshore casino operators are supposed to withhold tax of 30% when making payments to winners if the winnings exceed INR 10,000 (which equates to GBP 115).
Offshore gambling regulation is tough to enforce via India tax laws, but in the event that taxes are not taken out of casino winnings, players are expected to report their winnings. Failure to do so can lead to prosecution from the proper authorities. If a player does not report their gambling winnings, they are wholly responsible, not the online casino operators they use.
Have There Been Any Updates To Tax Laws?
In April 2017, a uniform goods and services tax (GST) was formally introduced. The new policy applies to both federal and state government levels and was officially enacted in July 2017. It is an indirect tax for the entire nation and intended to unify the overall market. The imposed tax bracket is intended to have multiple benefits, including uniformity of rates, ease of implementation and higher revenue efficiency. Taxes on lottery, betting and gambling winnings are being subsumed on the state level.
The GST system has several levels in place. Casinos and betting operators are at the highest level—28%. Government officials believe it is only fair that casinos are part of the most expensive tax bracket, as entertainment and luxury taxes are merged with service taxes under the GST. Now, legal online casinos in India do not technically fall within this grouping. There is a provision for “all other services not specified elsewhere”, and any such activity that falls within this category is subject to an 18% rate.
Tax On Poker Winnings In Indiana
Key Takeaway
How To Play Winning Poker
Since the GST is relatively new, and gambling laws are already vague regarding online gambling, the tax situation is still blurred. Online gamblers should expect some percentage of their winnings to be withheld before they receive their payout. India based online casinos will have a 28% rate applied.