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COPYRIGHT © 2015-2021 Transamerica Direct Marketing Consultants Private Limited. All Rights Reserved. Income from other sources Related: Investing strategies you can learn from FIFA World Cup Related: Lessons on investing from creating a cricket dream teamResponsible playing Here’s a word of advice: playing responsibly also means paying your taxes on the winnings. So, always make it a point to pay taxes on time, even as you indulge in betting responsibly, and file your returns at the end of the year. This helps you keep things legal and continue gaming or gambling within the purview of the Indian laws. Look at these 5 Games that can improve your financial skills.Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas. As online gaming provides an opportunity to win money while sitting at home, several people are getting attracted to become professional gamers. This has also been a key incentive for the younger generation to become full-time gamers.The income tax conundrum on games Indirect taxes Are there any indirect taxes on gambling income? GST is levied on the specially defined category of all entertainment events and services, listing casinos, race courses, and related services. These are all taxable at the rate of 28%. However, this is an indirect tax already included in the final product you purchase when you play.
Let’s take an example. If an individual’s annual income is Rs 1.5 lakh, and they earn Rs 50,000 from online gaming, their total income is Rs 2 lakh, which is below the exemption limit of Rs 2.5 lakh. However, the individual still has to pay tax of 31.2% on Rs 50,000 including cess. The entity distributing the prize money will deduct tax at source, in the case of the winnings exceeding Rs 10,000, as per Section 194B of the IT Act, before distributing the amount won, and the receiver will need to disclose the amount while filing their annual income tax returns.Tax deduction at source Gaming operators charge 30% TDS. This is a general practice followed by sites offering games of skill in India and needs to be disclosed in the IT returns of an individual. This implies that gamers no longer have to worry about figuring out and paying their tax on online winnings.No exemption The income will also not be subject to the benefit of deduction, as under Section 80C of the IT Act. The entire amount from such winnings will be fully taxed, without any deduction from investment, house rent, medical insurance, and others. There is absolutely no deduction on expenditure allowed to be claimed against the prize money won in the case of online gaming. There are several gaming websites like Zapak, Miniclip, Shockwave, Gamesonline and Agame that offer a massive collection of games providing an entertaining single and multi-player experience. You can try one of these above apps or sites to get a high-quality gaming experience. The popular categories are action, adventure, cards, board, jigsaw, music, puzzle, racing, shooter, sports, strategy and word games, among others. This endless collection of games is updated on a regular basis.Case study When you win some real money on your favourite games, how much of your winnings can you expect to bring home? Is there an online and offline gambling tax in India? Are online gamers mandated to pay tax on their winnings? Read on to find out.
Related: Mobile games that will help you learn about stocks Saving money is an art! Master it with our newsletter. No matter where or how you gamble, you are liable to pay tax on your winnings. You will need to declare the additional gaming income while filing your IT returns, and will be taxed accordingly. The gaming income is to be reported at the time of filing of the gamer’s tax returns. As a rule of the thumb, all the income and winnings generated from online betting or casino gambling activities will incur a flat 30% tax without cess and without accounting for the basic exemption limit. After adding 4% cess, the ultimate tax rate for all casino and gambling earnings in India amount to 31.2%. This is a welcome source of additional revenue for the government. Income earned while playing online games is subject to tax under Section 115BB of the Income Tax Act, 1961, and is taxed under the head ‘Income from Other Sources’. The Section specifies that any winnings from lotteries, crossword puzzles, race betting, card games such as Andar Bahar, Teen Patti, and online rummy on reputable online casino platforms, as well as gambling or betting of any form or nature, falls under this purview. The tax rule is also applied to winnings from online gaming, irrespective of an individual’s total income, with no exemptions being made.Online games that let you earn real money