Most Indians ignore tax on online gaming
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It is an undeniable fact that Indians love gambling. While gambling is generally not legal in most parts of India, no law declares online gambling as illegal.
The only law concerning gambling is the Public Gambling Act which was provided in 1867. While it generally prohibits operating or visiting public gambling houses, it gives the power to individual states to decide what happens in their territories.
However, this gambling act mentions nothing about online real-money gaming. This has given room for players to enjoy betting at online casinos and gambling sites freely. All that is needed is for the online casino or gambling site to be hosted outside of India.
According to recent reports, over 40% of Indians are involved in some form of gambling, with a majority of them doing so online. With millions of Indian gambling online, taxation from their winnings can be a huge source of income for the government. Unfortunately, most Indians do not pay tax from their gambling winnings.
Online gambling income tax rate in India
Before we proceed to explain why most Indians ignore paying taxes on online casino income, it is important to understand how income earned from gambling sites is taxable.
The income you get from online casinos or sportsbooks comes under the sub-heading “income from other sources”. This can be found on your yearly tax report. The specific rules concerning gambling taxation are dealt with under the Income Tax Act, section 115BB. This section covers all earnings on winnings from card games, gambling, betting, and other similar sources.
Therefore, Indian residents are expected to pay 30% taxes on earnings made from online casino and gambling winnings. The players have the responsibility to pay the taxes as the online casinos do not deduct the tax before paying out winnings.
For example, when Indian residents play online roulette and win money, the profit needs to be declared and taxed. Obviously, most Indians do not pay this.
While many punters are just ignorant of the taxation policy, some simply ignore it. And since the country does not regulate its online gambling market, it is easier for players to get away without paying taxes from their winnings.
How online gambling regulation can help
The Indian government is obviously losing a lot as most players ignore paying taxes from their winnings. However, the only reason for this is the lack of regulation of the activity.
Many punters even present rational arguments that the government should not expect taxes from online gambling since it doesn’t regulate it or oversee the gambling operators. But why can’t the government also oversee the payment of these taxes?
Online casinos make use of different payment methods including e-wallets and cards. Thus, it is difficult to keep track of all income coming in through these methods. But if online gambling is legalized and regulations are made to guide it, it will become easier to control the market.
With the increase in the availability of many payment methods, many punters will continue to avoid paying online gambling taxes easily. At least, until the Indian government decides to make the activity regulated.
