Online Gaming Taxation under Income Tax and GST Laws

Import of online money gaming has been removed from the ambit of the Customs Tariff Act, 1975, and only IGST would be levied in accordance with section 5(1) of the IGST Act, 2017. Section 206AB of the Act provides for a higher rate of tax deduction where the payee is a non-filer of income-tax returns. The term “any other games” should be interpreted broadly and may encompass income from online gaming. Consequently, winnings from such games fall within the scope of ‘income.’ The definition does not differentiate between offline and online gaming. Therefore, income derived from online gaming is also to be included within the definition of income under Section 2(24)(ix) of the Act and fall under the head ‘Income from Other Sources’ (IFOS). Such sites often cover card games, slot machine games, virtual game rooms and other virtual-reality sports games based on the wagers placed by such players on the respective website with instant payments.

However, gaming companies contend that legal skill-based games, like rummy, poker, and fantasy sports, should be taxed at 18% on gross gaming revenue, in accordance with international standards, rather than on face value. This growth trajectory has transformed online gaming from a niche entertainment activity into a multi-billion-dollar sector, attracting investment, generating employment, and contributing to the digital economy. Understanding the tax implications of online casino winnings in India is crucial to comply with the law and avoid legal consequences. While the general rule is that gambling winnings are subject to a 30% tax rate, specific factors like state regulations, deductions, TDS, and international considerations can affect tax liability. Seek guidance from tax professionals and stay updated on relevant laws and regulations. Under Indian law, gambling income is not treated like salary or business profit.

Tax Deducted at Source (TDS) by Casinos

It recognises the dangers of unregulated money gaming and responds with firm safeguards to protect citizens. At the same time, it carves out space for e-sports and educational games that nurture skills and creativity. By balancing innovation with responsibility, the Bill sets the tone for a safer and healthier digital future. It also strengthens India’s standing as a nation that can lead in shaping global digital policy. Most importantly, it ensures that technology serves society rather than harms it. According to Section 115BBJ of the IT Act, income tax is due at a rate of 30% on the amount of net winnings from an online game when the assessee’s total income includes any winnings from such a game.

  • This high GST rate is imposed on the gross value of wagers, and not just on the winnings, which means gaming platforms must pay GST on the total bets, regardless of whether the player wins or loses.
  • The new provisions bring clarity, especially in terms of TDS and taxation on net winnings.
  • However, where the game is made available through offline channels like through CD, DVD’s, or USB’s, it cannot be said to be offered through the internet.
  • We’ll discuss the relevant regulations and provide guidance for Indian gamblers.
  • The rapid spread of online money games has created serious risks for individuals, families and the nation.

Online Gaming Tax: A Comprehensive Overview to Taxation on Winnings in India

Even though the laws governing online betting in India are vague, it is possible for Indian players to bet legally and securely. However, it is important to note mostbet official website that winnings from online betting are fully taxable per the Income Tax Department. This article explains how casino winnings are taxed in India, the applicable rates, exemptions, and the legal requirements for both players and operators.

Hon’ble Supreme Court has held in the recent judgment that Betting, Gambling and Lottery are taxable under the CGST Act,2017. This is a welcome move in view of the fact that humongous Indian population has embraced online gaming with open hands and the mandates proposed recently will bring the spur in online gaming within the regulatory framework. An input tax credit (ITC) can be claimed on goods and services utilised to advance a taxpayer’s business as per the CGST Act’s Section 16(1).

How do online gaming platforms handle TDS on winnings?

The growth of this industry has contributed to employment opportunities not only in this industry but across the board, especially in IT and related services, attracting millennials and creating opportunities in non-conventional sectors. The online gaming industry has evident strategic importance with a growing Indian user base and rising investor interest in deals. It is, therefore, imperative that India establishes a robust, uniform, and unambiguous tax and regulatory landscape to fuel the impending growth of the sector. Since online casinos are allowed with certain rules and regulations in India, they are taxable, so don’t forget to file your returns properly. Every earning you make from online games are to be declared on your Income Tax Returns to avoid scrutiny and legal repercussions. It is the gamer’s responsibility to disclose the particulars of TDS deducted winnings in their returns even though they have provided their details such as PAN, bank account, and address to the betting site or online casino.

The burgeoning market for interactive digital entertainment, encompassing online gaming, has demonstrated a consistent trajectory of fiscal expansion. This upward trend underscores the increasing pervasiveness and economic salience of online gaming within both the global and domestic spheres. The Indian Parliament passes the Online Gaming Bill of 2025 that bans all real-money online games with the objective of curbing addiction and financial harm while promoting e-sports and social gaming. Continue reading to understand the key provisions and implications of this Bill. Distinguishing between games of skill and chance has been discussed, though, and this could result in different tax treatment down the road.