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Online Rummy Cash Winnings Are A Cause For Celebration But Only After Taxes!

Online Rummy: Every time we see the faces of lottery or cash prize winners, it is pretty evident that they not only win lots of money but also are euphoric. Makes us wonder how lucky they must be! At some point we all have imagined what it would be like to be in their place. But what most people don’t think of is the tax that winners have to pay on cash winnings.

Here is the lowdown on the tax mechanics:

You would be surprised to know that normally the online gaming platforms deduct the payable tax amount on your winnings at the source itself. But in rare circumstances, the winners themselves have to declare it when they complete their tax returns.
It has to be listed under the ‘other sources of income’ section. Any wins that goes above Rs 10,000 from the online platforms will be taxed and fall under the ambit of Income Tax Act of 1961. It is mentioned under section 115B that any money belonging to the individuals from lotteries, gambling, crossword puzzles or any other game of such nature shall be taxed at the rate of 30% on a uniform basis. It doesn’t matter whether the person is eligible to pay taxes or not.
Sometimes the prize can be in kind and not a cash one like for instance a car. In that case the distributor must ensure the tax has been paid before releasing the prize. There is also the option of recovering the tax amount from the winner if the distributor does not want to bear the burden. The tax will be calculated based on the market price of the item.

How about offshore winnings?

If a player wins at an offshore casino and if the cash prize is more than Rs 10,000 then the game operator has to withhold 30% for taxation purposes. The individual will be liable to pay local taxes separately.

The online gambling sphere is growing like wildfire. The industry houses about 300 million players in India. It is predicted to double up in just a matter of two more years. Some gaming portals have reportedly seen a 100% spike in new registrations owing to the recent lockdown. While the industry seems booming, current tax laws are deemed vague by many. The government is yet to make proper regulations around cash winnings in online rummy. Once these taxation policies are clearly established, many big online gambling giants are expected to take base in India.

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