homepersonal finance NewsGambling online during Diwali? Here's how your winnings will be taxed

Gambling online during Diwali? Here's how your winnings will be taxed

Amounts won from a game show or lottery are taxable under Income Tax Act, 1961. Read this to understand the taxation structure

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By Anshul  Oct 21, 2022 10:50:31 AM IST (Updated)

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Gambling online during Diwali? Here's how your winnings will be taxed
Gambling is extremely popular on Diwali night as it is believed that playing cards on the festival of lights not only impresses Goddess Lakshmi but also ensures her goodwill. However, if you have converted into an online person, courtesy of the lockdowns in the past few years, and plan to indulge in the sport with friends via this route, there is a tax involved.

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Online gaming (that involves money) is treated like a lottery, horse race, sports betting, games of chance, etc. Accordingly, the winnings from online gaming are taxed at the highest tax bracket without any of the benefits of any deductions and exemption limit, as per Income Tax rules.
So, what is the tax on online game winnings?
In case of winning from websites etc if the prize money exceeds Rs 10,000, then the winner will receive the prize money after the deduction of tax deducted at source (TDS) at 31.2 percent (30 percent tax plus applicable cess under section 194B of the Income Tax), said Archit Gupta, Founder & CEO, Clear while talking to CNBC-TV18.com.
Are deductions allowed here?
No deduction under section 80C or 80D or any other deduction/allowance is allowed from gambling income. The benefit of the basic exemption limit and income tax slab rate is also not applicable to this income.
So, will the winner will always receive the income after the TDS deduction?
In practice, most online casinos follow a policy of charging TDS when a player makes a withdrawal that is over Rs 10,000. However, in some cases, online casino sites might allow the players to withdraw the full amount. In those cases. Here, the onus of accurately reporting gambling income is on the taxpayers when they file their annual income tax return (ITR).
Is there any GST charged on online gaming?
At present, online gaming has a dual tax rate system. The government levies an 18 percent tax on games of skill (not involving betting or gambling). Games of chance (involving betting and gambling) attract a GST of 28 percent. Online gaming apps mostly have to pay GST at 18 percent, while casinos and horse racing attract GST of 28 percent.

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