Sports bets at betting sites with free registration bonus in India are a very popular form of entertainment. Lately, more and more bettors are choosing to bet on their favourite sports using various online platforms, thanks to which they get a wide range of emotions and the opportunity to win real money without serious restrictions from the comfort of their homes.
However, as interest in this activity increases, questions arise about the taxation of betting winnings. In this article we will look in detail at the taxation of gambling winnings in India, including issues relating to taxation rules, tax filing obligations and possible changes in legislation.
Overview of Sports Betting in India
The online sports betting market in India is experiencing significant growth and development. Indian users are increasingly turning to online sports betting through specialized platforms. The convenience of placing bets from the comfort of home, coupled with the availability of a wide range of sports and betting options, has made online sports betting a popular choice among Indian punters.
Various sports games such as soccer, tennis, badminton and many others are popular in India. However, the most popular sport in this country is cricket and the Indian Premier League (IPL), which attracts numerous players across the globe. The popularity of online betting has been further enhanced by the availability of live streaming and in-play options, which allow bettors to make stakes in real-time while watching the game. Another trend in the Indian gambling market is the growing interest in international sports betting, which is attributed to the increasing exposure of Indian consumers to international sports through various online platforms, as well as the success of Indian athletes in different sports like football, basketball, tennis, etc.
The legislation governing online sports betting in India is complex. While online sports betting is not explicitly regulated, neither is it illegal. The legality of online sports betting in India is determined on a state-by-state basis. Because of the federal structure of India, states are able to pass their own gambling laws, resulting in a patchwork of rules that may vary greatly throughout different areas. Since some states allow sports betting while others have tight bans, this diversity creates a difficult environment for operators and enthusiasts alike.
Thus, the high popularity of online sports betting and the complex legal framework are key features of the gambling market in India. As the Indian economy continues to grow and more Indians gain access to the Internet, the online sports betting market is expected to flourish in the coming years.
Understanding Taxable Income in India
Taxable gambling income in India are:
- Contest entry amount (CEA) and gross gaming income. In this case, sports betting operators pay tax in the amount of 28% on the total value of wagers, both skill-based and chance-based.
- Winning real money in online gaming. Various online gaming platforms in India provide players the opportunity to win real money. This income is taxable as ‘Income from other sources’ under sections 115BBJ and 194BA. Winners are taxed at a flat rate of 30% regardless of any threshold.
- Winnings from gaming tournaments. Winnings from various gaming tournaments can be in the form of cash or gift prizes. Under the Income Tax Act, these winnings are treated as online gambling winnings and are taxed at a rate of 30% under “Income from other sources”.
- Referral and joining bonuses. If the amount received for promoting the platform is allowed to be withdrawn, it is also taxed at a rate of 30% as part of the net gambling winnings.
Tax Treatment of Sports Betting Winnings in India
Income derived from gambling in India is taxable for both players and operators. According to section 115BB of the Income Tax Act, players who receive winnings from gambling entertainment, including online sports betting, are liable to pay personal income tax at a flat rate of 30%. This tax is withheld at source (TDS), which means that the gambling operator deducts the tax from the winnings before it is paid to the player. Such measures are taken to ensure timely tax payment and minimize the risks of tax evasion by players. To ensure tax compliance and understand their specific circumstances, players should seek detailed explanations on how to pay TDS directly from their gaming platforms.
How does it work in practice?
For example, a user registers on an online gambling platform and makes a deposit of INR 1000, starts betting on sports and wins INR 50,000. In such a case, the gaming firm will deduct the bettor’s TDS from INR 49,000 (INR 50,000 – INR 1,000) at the rate of 30%, and he will have to pay tax of INR 14,700.
For gambling operators, taxation also has several components. They are required to pay Goods and Services Tax (GST) at a rate of 28% on Gross Gaming Revenue (GGR). Gross Gaming Revenue includes all bets accepted by the operator, less winnings paid. In addition to GST, operators are liable to pay corporate income tax, which is calculated based on the net profit of the company. The corporate tax rate for local companies is 30% and for foreign companies 40%, subject to additional levies and taxes.
Tax Filing Requirements for Bettors
In order to legally receive income from cricket betting apps for android in India, a bettor needs to register as a tax agent. The registration process includes submitting applications, providing the necessary documents and obtaining the relevant registration numbers. Tax on income derived from participation in gambling is paid monthly, and a tax return is filed each year on July 31. The reporting procedure includes:
- Calculation of tax amounts;
- Completion and submission of tax returns;
- Payment of taxes in due time;
- Keeping all primary documents.
Untimely or incorrect reporting can result in fines and penalties. It is therefore necessary to carefully monitor deadlines and follow all procedures precisely.
International Winnings and Taxation
Under the Income Tax Act, any gaming winnings are considered income and are taxed at the rate of 30% under Section 115BB. The same applies to international winnings when, for example, a player from India receives winnings from a foreign company but withdraws the money using Indian payment methods and in India.
However, it should be noted that if taxes were paid on the winnings in the country where they were received, the taxpayer can claim a credit for these taxes under the Double Taxation Avoidance Agreement (DTAA), if such an agreement exists between India and the relevant country.
Potential Changes to Tax Laws for Sports Betting
In 2023, significant changes were introduced in the legislation of India concerning the taxation of income received from participation in gambling. In particular, the tax rate was increased. These changes are aimed at increasing tax revenues from this sphere.
In addition, the possible changes may focus on simplifying tax procedures for bettors and operators, making the process more understandable and accessible. It is expected that the Indian government will strive to create a more sustainable and regulated environment in order to protect the interests of players.
Conclusion
Tax on online sports betting is mandatory in India, irrespective of the amount of revenue generated. The rapid growth of the online betting industry has forced the Indian government to make changes to tax rates, GST and applicable thresholds.
However, it is believed that the current GST rate is quite high, which may discourage numerous players and adversely affect the growth of the Indian gaming sector. As the Indian government is keen to ensure that tax revenues to the treasury grow, it can be expected that measures will be put in place to incentivize the gaming sector and change the GST rates.