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 Due to the outdated nature of online gambling laws, there is no specific mention of online gambling, meaning it is legal for residents to participate in.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 within 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 a 18% rate.
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.