In 2022, the GST Council deferred the proposal to levy a 28% tax on online gaming, casinos, and horse racing. During the second day of its meeting in Chandigarh, the council sent the proposal back to the Group of Ministers (GoM) responsible and re-assess the issues after discussions with the states and stakeholders.
Currently, these GST rates are applicable.
- An 18% GST applies on a game of skills, such as esports, puzzles, and selected card games, under HSN 998439. GST is taxed on the platform’s commission/service fee, or gross gaming revenue is present (total stake value – distributed winnings).
- A 28% GST is applied to all gambling activities at casinos, as classified in HSN 999692, and is calculated based on the total value of any bets placed.
Due to the lack of a unified code regulating online gaming, different states have adopted varying positions on the subject.
GST Calculation for Online Gambling
Section 115BB of the Income Tax Act states that there is taxable income from gambling. It is categorized under ‘Income from other sources’. It is subject to a flat rate of 30% and an additional 4% cess charged at 31.2%. To combat gambling addiction, an exemption limit of 2.5 lakhs has been set up.
Personal Tax on Gambling Winnings
Under section 194B of the income tax act, winnings from lottery and gambling, including poker, are subject to tax. And in India, all winnings from gambling, lotteries, and games have a corresponding TDS of 30% from the provided amount of at least Rs. 10,000, excluding cess.
After factoring in taxes, the net rate is 31.2% minus any exemption benefits.
Changes in Gambling Tax Laws
Research shows that most places that permit gaming activities impose taxes on the gross gaming revenue (the money made by gaming operators) or the rake fee. For games of chance, a tax is usually placed on the entry fee or bet.
If the tax rate is above 20%, a Copenhagen Economics report indicates gaming operators and consumers may opt out of joining the licensing system, resulting in lower revenue for casinos.
Surprisingly, France’s higher gross gambling revenue (GGR) tax rate of 37% on online poker and 45% on sports betting yields a per capita revenue 41% greater than what the UK receives with their GGR tax rate of 15%.
To sum up, in accordance with state regulations, winnings of more than Rs.10,000 from any lottery game, crossword game, card game, or casino game are eligible for income tax deductions. It is when paid by an individual and taxed at the rates applicable.
Different requirements may be applicable in other states, so it is vital to be aware of the double taxation and operating licenses.
Keep a check on the tax deductions so that an individual is not paying extra taxes through TDS or online transactions. Online transactions at BigBaazi live casino enable secure transactions between players via trusted Indian payment methods without additional fee cuts during withdrawal or deposit.
Many online casinos operate with offshore licenses, including Big Baazi, so take care of your taxes or demand sufficient transparency so you get all winnings.