– – April 24, 2021, 7:29 p.m.
Profits from lotteries and games of chance such as poker are taxable. Casinos that accept Indian players are required to report tax files to ensure they are complying with all taxable income. India imposes TDS on all winnings from gambling. TDS stands for Tax Deduction at Source. Pursuant to Section 194B of the Income Tax Act, winnings from lotteries and games have a corresponding TDS of 30% when the amount is at least Rs. 10,000. In addition to a TDS of 30%, poker includes a further 0.9% as education tax. Therefore, the total tax on poker winnings is 30.9%.
Are all poker winnings taxable? No! A tax will be deducted from your profit if the total is over Rs. 10,000 in a single game. In online poker, the tax is automatically deducted from your winnings. Once you have received the payout, you will no longer have to pay any additional taxes. However, if TDS is not deducted from your winnings, you must claim 30.9% income tax within 30 days of receiving the amount.
How do you calculate TDS?
In terms of Indian Tax Law, no TDS (Tax Deduction at Source) will be deducted if the amount deposited is Rs 10,000 more than the payout. In which scenarios is TDS withdrawn? When a poker player has deposited Rs. 15,000 and only uses part of it, for example only take Rs. 4,000 and the player wins Rs. 13,000. The total balance at the till would be Rs. 24,000. When you want to withdraw your remaining balance from Rs. 24,000, there is no tax deduction for not using all of your funds, but a 30% TDS will be deducted from your profit amount which is Rs. 13,000.
TDS Certificate – The Importance of Tax Deduction on the Source Certificate
When playing at online casinos, TDS is automatically deducted from your winnings if the win amount exceeds Rs. 10,000. However, it is important to note that if the casino withdraws a TDS, you will need to request a TDS certificate as it serves as evidence and protection. There have been cases where the online casino website did not provide a TDS certificate but did deduct taxes. There have also been cases where no TDS was deducted, but later the online casino was asked to submit TDS out of their budget on behalf of the player. Hence, the TDS certificate is vital as it offers protection to both the online casino and the players.
Casino players should also be careful with promotions and campaigns. As part of the promotion, some online casinos are declining from the TDS, but do not provide a TDS certificate. It is a red flag as it is most likely involved in illegal practices. Once you get caught dealing with these casinos you will be held legally liable. Both the casino sites and the player are tracked and could face jail terms and fines.
If you are a casino player in India, be it at online casinos or land based casinos, you should make it a habit of requesting a TDS certificate for your winnings above Rs. 10,000. TDS deductions can be accessed on Form 26AS, which you can use later when filing income tax. Always remember that ignorance of the law does not excuse anyone. So, for your own safety, you need to know these things in advance.