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India proposes 30% tax hike on online winnings

India proposes 30% tax hike on online winnings

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Under the terms of its Income Tax Act, the Indian government has proposed new rules to define online gaming and levy a tax of 30% on net winnings from online games.

The proposals were made in the Finance Bill 2023, released on February 1st following a budget presentation by Finance Minister, Nirmala Sitharaman.

The proposal to levy 30% income tax on net winnings from online games and define gaming was added to the Finance Bill and would come into effect from April 1st 2024.

Ms Sitharaman also proposed the removal of the current minimum tax-free threshold of 10,000 rupees (US$120) on online gaming winnings, meaning that tax will be charged on all winnings below that amount.

The new Finance Bill also gives the Securities & Exchange Board of India (SEBI) the power to create a process for deduction of income tax at the time of withdrawal of net winnings from online games.

The non-gambling gaming industry has welcomed what is seen as a clear distinction between online gaming and online gambling. The online gaming industry in India has maintained that the games offered on real money gaming and fantasy sports platforms are games of skill, as recognised by various Indian courts. They have urged the government to ban offshore betting platforms and block ‘surrogate’ advertising by overseas betting companies on sites such as Google and YouTube.

Roland Landers, CEO, All India Gaming Federation (AGIF), says: “We are happy to note that the Finance Bill carves out the distinction between betting and gambling activities and online games, through introducing a new section which taxes a user’s net winnings from online games at the end of the financial year.”