Taxing of Teen Patti Winnings in India | Complete Guide
As a popular Indian card game, Teen Patti has continued to entice card game fanatics for centuries now. Teen Patti is enjoyed by millions of players during the festivals of Diwali and Janmashtami, and it is a prominent part of social gatherings and family events as well.
However, the legality of real money Teen Patti and its taxation is a tricky subject in India. And with the rise in popularity of real-money Teen Patti platforms in the country, it’s crucial for Teen Patti players to understand the taxation aspect of Teen Patti in India.
This article details everything you need to know about taxing on Teen Patti winnings in India. Continue reading!
The rules for taxing on Teen Patti winnings in India
Indian tax rules for land-based and online gambling are still vague and unclear. The Public Gaming Act of 1867 sets up the foundation of gambling levy requirements and categories in India. However, there are several other legislative acts that form the basis of gambling taxation in the country.
Primarily, the Income Tax Act and its section 194B defines the categories and tax brackets for gambling in India. Another section defining tax brackets for Indian gambling is 115B, which was introduced as an Amendment to the Finance Act of 1986.
As per section 115B of the Income Tax Act, any winnings from lotteries, crossword puzzles, race betting, card games such as Teen Patti as well as gambling of any form or nature is taxed at a flat rate of 30%.
The Income Tax Act, 1961 also dictates that no basic exemptions are provided in the case of winnings coming under section 115B. What this essentially means is that the tax rule is applied to all online Teen Patti winnings, regardless of the player’s total income.
Also, note that the person paying out the winnings needs to deduct tax at the source before distributing the prize money. This TDS provision, laid down under section 194B, is applicable only if the winnings exceed Rs. 10,000.
Usually, most Online Teen Patti platforms follow the policy of charging a 30% TDS on withdrawals that are over Rs. 10,000. So, players usually don’t have to worry about figuring out and paying out the tax on their online Teen Patti winnings.
Sometimes, online casino sites might not charge TDS and allow players to withdraw their complete winnings. In such cases, the responsibility of declaring and paying out the tax is on the player when they file their annual income tax return. This is quite rare though.
What about the GST for Online Teen Patti?
In April 2017, a uniform goods and services tax (GST) was introduced in India. Intended to unify the overall market, GST is an indirect tax that is applicable to the entire country.
Under entry 34 of the CGST Tax notification, all services related to an entry into a casino would be charged with a GST of 28 percent on the gross amount collected as an entry fee. In a subsequent circular, it was clarified that the 28 percent GST would apply on entry to gambling venues as well as on betting and gambling services being provided by the venue on the transaction value of betting, in addition to GST levy on any other services.
Now, legal online Teen Patti platforms in India technically don’t come under this grouping. The CGST Act has a provision for “all other services not specified elsewhere”, and any such activity that falls within this category is subject to an 18% rate.
Are there any direct surcharges for Teen Patti winnings?
In addition to the 30% taxation of Teen Patti winnings (gambling income), there are some other surcharges and tax conditions, depending on income groups.
For instance, if the winnings exceed Rs. 50 lakhs, a surcharge of 10% is applicable to the normal tax rate, making it a total of 33%. Meanwhile, winnings exceeding Rs. 1 crore are subject to a surcharge of 15% of the tax rate, bringing the total to 34.5%.
These tax thresholds are usually applicable to lottery winnings though. This is because online Teen Patti sites don’t allow such large withdrawals at one time. Therefore, the only surcharge that is a permanent addition to the flat-rate income tax on Teen Patti winnings is the Health and Educational Cess. This surcharge is set at 4% and is payable by all persons liable to income tax.
That way, the total tax rate for all Teen Patti winnings in India becomes 31.2%.
Given the fact that online gambling laws in India are unclear and complicated, the tax situation on Teen Patti remains blurred. Nevertheless, Online Teen Patti players should expect some percentage of their winnings withheld before receiving a payout.