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In a lot of countries around the world there are no taxes applied to any winnings from gambling. However, India is different. There are a number of different taxes applied and in different ways to players within the country. We’re going to take a look at the different ways that taxes are applied to gambling at all the different stages.
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While land based casinos are obviously not online gambling, it’s still important to see what taxes are applied to the operators in order to get a good comparison. When it comes to land based casinos there are taxes applied to any revenue that the casino is able to create. Over the last three years the Indian government has introduced a goods and services tax, this is applied to all different businesses that create revenue. As such land based casinos come under that umbrella. There are different levels of tax that is applied to businesses in India and land based casinos come under the highest level. This means that any revenue that the land based casino creates is taxed at 28%. It’s believed by the government that this high rate of tax is justified as the previous luxury and entertainment taxes were merged into the goods and services tax. On top of this the Indian government believes that the additional tax revenue is needed in order to combat any potential issues that may arise from gambling.
This is a slightly more complex topic. Although online casinos aren’t strictly legal within India, they also aren’t strictly illegal either. The grey area can be difficult for a lot of people to understand. Essentially players can use offshore online casinos within India, even though it is not legal. They will just not be fined or charged with anything. It’s completely legal to operate an online casino offshore to be used for Indian players but there are some tax restrictions in place. The taxes in place for online casinos are set at a lower amount than land based casinos. The main reason behind this is that the casino itself isn’t on Indian soil, so by setting the tax rate lower it means that it is seen as a fairer rate. Offshore online casinos are subject to a tax rate of 18%, which is a full 10% lower than a land based casino. Another reason why the tax rate is so much lower is that it comes under a separate provision that automatically comes with a lower tax rate. This is because the Indian government doesn't have full online gaming regulations in place.
Land based casino winnings are subject to a tax of 30%. This means that the government is taking a slice of both the revenue the casino creates and the revenue the players create. This is because the Indian government sees gambling winnings as a form of income. The reason behind this is that the gambling restrictions in place classify gambling games as skill based games. As such, the winnings are a valid form of income and it allows for the strict government to turn a blind eye without going against its morals.
The 30% tax is in place for any other form of gambling winnings as well. So this means that a lottery, sports bet or even winnings from a competition in a magazine will all have a tax of 30% levied against them.
Players will be expected to declare their winnings and then pay the taxes manually. If the winnings aren’t declared and then the player is found out to have hidden the winnings then there will be a fine in place on top of the 30% tax. If the amount is sufficiently high then it can also lead to time spent in jail. This is why it’s always best to pay the tax at the first available opportunity in order to limit how much it will cost you in the long run.
Some players believe that because their winnings were won at an offshore casino they’re exempt from the Indian tax laws. This is not the case. The winnings are still subject to paying the 30% tax rate. However, it is slightly easier at an online casino due to one main rule that’s in place. If a player wins more than IDR 10,000 then the online casino has to automatically take the 30% away. While this might seem annoying, it does mean that players don’t have to worry about working out how much they owe and paying it manually. The online casino will carry out the tax deductions for them and ensure that the tax is paid in full.
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