From online casinos to income tax: How COVID-19 impacts India tax regime

There’s no denying the so-called “black swan” effect that the COVID-19 pandemic has brought in its wake. In just a few short months, the coronavirus pandemic upended the daily lives of all people around the world—schools and work have been shut down, international travel banned, stock markets crashed—as governments wait for a vaccine with proven efficacy. But does the outbreak also impact key Indian income tax aspects like online casino winnings?

India’s tax situation

The answer: yes, and no. Due to the ongoing global pandemic, the Central Board of Direct Taxation (CBDT) announced in October that the deadline for filing income tax returns (ITRs) has been extended to December 31, 2020—giving taxpayers, even online gambling players—a little more time to submit their forms. But yes, everyone still needs to file their ITRs or risk paying a hefty fine.

Per national tax laws, a taxpayer’s residential status—aka, the length of physical stay in the country—determines which income is taxable. With the ongoing lockdown as the COVID-19 cases in India surge, it’s safe to say that most people have largely been in the country for the past year with a few, if there are even any, trips abroad.

What’s the tax rule for online casino winnings?

As the COVID-19 lockdowns result in most people being left to their devices—literally—many have started turning to the technology in different new ways, be it for remote work, homeschooling, checking out the latest news and current events, to learning a new skill or taking up a new hobby, and even playing online card games like teen patti, Andar Bahar and online rummy on reputable online casino platforms.

This begs the question, are online casino players also mandated to pay tax on their winnings? Why yes, of course. A report by ENV Media, titled Indian Income Tax: Online Casino, Betting and Casual Skill Gaming, explored thoroughly the ins and outs of Indian gambling taxation. Put simply, “online gaming is subjected to taxation as well and choosing reputable casino operators which take care of this aspect is more than enough at the player’s end.”

The Income Tax Act of 1961, Section 115BB specifies that any winnings from lotteries, crossword puzzles, race betting, card games and other games, as well as gambling or betting of any form or nature is taxed at a flat rate of 30%. This applies to all online gambling winnings regardless of an individual’s total income, and no exemptions are made. Fear not, however, because reputable online gaming operators already charge a 30% TDS (tax deducted at source) so players no longer have to worry about figuring out and paying the tax on their online gambling winnings. If a platform promises “full amount” payment of online casino winnings, that means the gamer is tasked with the burden of declaring his or her winnings via the correct annual tax form.

So save yourself from the headache—and possible case of hypertension—and file your income tax return before the end of the year. And for online casino players, here’s a word of advice from ENV Media: “Play responsibly—that also means pay your taxes.”