Are winnings from online betting apps taxed?

The Udayavani team, September 7, 2022, 3:00 PM IST

Representative image (Source: iStock)

Since gambling is so popular in India, India’s IT department has set rules for every activity where money is involved, and there are provisions for income from online betting and gambling source. by chance.

Although there are no clear laws for online betting in India. Therefore, betting apps based outside India that accept Indian rupees can be considered legal for Indian players. The Public Gambling Act of 1867 sheds light on the legal aspects of betting and mainly revolves around whether the game qualifies as a game of skill or a game of chance. The Indian government has allowed each state to decide its own rules of play in India.

There is a ton of sports betting apps in india since Indians love to bet on sports like cricket and kabaddi. Although cricket is the most loved and famous sport in India. However, it is not the only sport that people bet on. Although betting is quite common on sports like football and horse racing, betting on politics, weather, dice or teenage patti is no slouch either. There has also been a positive trend in betting since the lockdown as people have found more time for leisure and entertainment and the online betting and gaming sectors have benefited a lot.

But we have to sort out income diversity because most people also have a regular salary-based income. As online betting and gambling is now on the rise in India, it is of utmost importance to understand what happens to the winnings or winnings you make from online betting platforms.

What does the Income Tax Act say?

Computer law clearly states that there is no difference between income from fantasy games and income from poker. Any income from winnings from a game of cards or games of any kind is taxable at a flat rate of 30% plus applicable surtax and deductible. There is also no account for deductions or the basic exemption limit.

How are earnings from betting apps taxed?

Section 115BB of The Income Tax Act regulates income from online gambling. It comes under the head ‘Income from other sources‘ when filing income tax returns. Winnings from online games, poker, casino, etc. all count for it. Let’s look at some of the rules set out in Article 115BB.

  • Money earned from online gambling is likely to be considered income from other sources upon deposit (ITR). Such income will be taxed in accordance with the provisions of the Income Tax Act.
  • This income is taxed at a flat rate of 30% excluding cess without taking into account the ceiling of the basic exemption. The amount you pay after including tax is 31.2%.
  • For example, if an individual’s annual income is Rs 1 lakh and he has earned Rs 50,000 through online gambling, his total income is Rs 1.5 lakh, which is less than the basic exemption limit of Rs 2.5 lakh. But still, the individual has to pay tax on the Rs 50,000 including cess.
  • In addition, no deduction or expense can be claimed on this income.

Is income subject to TDS deduction?

  • If the prize money exceeds Rs 10,000, it is subject to a TDS @ 30% deduction.
  • It does not matter if the income falls below the limits of the tax table or not.
  • If the amount exceeds INR 10,000, the distributor is required to deduct the tax at the time of payment.
  • The recipient must always reveal this amount when filing their annual ITR, even if the entity distributing the prize money has deducted the TDS.
  • If the prize is received as a gift, tax will apply on the market value of the given prize although the TDS will be deducted before transferring the prize to the winner.

Conclusion

In summary, income from online betting is taxable in India. As we have advanced in technology, online betting apps in India have enabled bettors to bet legally and safely by ensuring full compliance with income tax laws.

Disclaimer: Online games carry an element of financial risk and can be addictive. Please gamble responsibly and at your own risk.


Source link

Back To Top