Laws and Regulations on Online Gambling in India?

Since the online gambling universe is expanding and developing at a rapid pace, not many countries can catch up with the speed of its advances, especially in the sense of adapting current laws and regulations to match the situation in practice. Indian laws aren’t extremely archaic, but they certainly need updating on a federal level. At this point, it is safe to say that gambling in India is regulated on a local level – every state brings forth its own laws and regulations in this matter. The only exceptions to this rule are horse racing and lottery, which are legal in all the states. Rummy is also a game widely played in this Asian country, fully legally, because in the eyes of Indian lawmakers it is considered a game of skill.

The central government isn’t allowed to intervene in any of the state proceedings and most states have enacted laws that are against gambling. Goa has made two amendments to the Goa, Daman and Diu Public Gambling Act, 1976 to legalize certain forms of gambling. There are several land-based casinos and offshore casinos that operate legally in the Indian state of Goa. Land-based gambling venues are limited to five-star hotels and floating vessels.

Sikkim is a second Indian state that has legalized specific forms of gambling, including land-based and internet gambling. The sites must keep their servers located within the states though, as foreign operators aren’t permitted to invest in gambling sites in India. There were rumours in 2010 that Sikkim would provide online gambling licenses to major operators by the likes of William Hill and 888, but these negotiations, if there are were any, apparently failed.

            Should a casino operator or a casino customer get caught in illegal gambling activities, they can face fines. Operators may pay a fine of ₹200 or be imprisoned for up to 3 months, while customers will have to pay a ₹100 fine or spend a month in prison.

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As was explained, gambling in India largely takes place under the supervision of union territory governments. The activity is outlawed by all states, except these: Goa, Sikkim, Daman, Nagaland and Meghalaya. Online betting apps are illegal only in Andhra Pradesh and Tamil Nadu. The most recent region to legalize gaming with stakes is Meghalaya. The Meghalaya government will oversee the implementation of the Meghalaya Regulation of Gaming Ordinance from 2021 and set up a Meghalaya Gaming Commission. By having a regulatory mechanism for online gaming, the state expects increasing tax revenues.

All in all, there isn’t currently any federal law in India that prohibits residents to engage in online casino gambling. If you want to gamble online, you are expected to choose a legal online casino, one with a valid license and a trusted reputation. Gambling is very much present in the lives of many Indian citizens and an increasing number of web casinos licensed by reputable jurisdictions service Indian players with barely any hassle.

In January 2023, the Indian government published new regulations and amendments to the Information Technology Rules to address online gambling. The amendments define the establishment of self-regulatory bodies comprising iGaming operators. These operators will be in charge of creating online gambling rules.

The new framework of norms needs to protect players from harmful behaviors like gambling addiction and prevent fraudulent activities. Members of these bodies must conduct KYC checks to verify players’ identities, enable a complaint process and have a contact address in India. However, if a self-regulatory body doesn’t establish standards aligned with the requirements, the government can prevent its registration.

Are You Required to Pay Taxes on Winnings?

In India, your profits from playing at online casinos are part of your annual earnings. It means that the income is fully taxable. The Indian tax legislation requires all gamers playing at casino sites to report profits over the non-taxable annual limit of ₹10,000. You must declare these earnings in your yearly tax report in the section “Income from other sources.”

The Central Income Tax Act, 1961 – 2012, explains the details about tax incomes from gambling in section no. 115BB. The winnings from any kind of gambling, including horse racing, betting, card games, or lottery, exceeding ₹10,000 per year are subject to a 30% flat income tax rate.

However, an additional 4% health and education cess increases the net tax rate to 31.2%. The funds collected from the cess fund national healthcare and education services and projects. Finally, the winnings over ₹50 lakh or ₹1 crore incur surcharges of 10% and 15%, respectively. It means that if you win more than ₹50 lakh, the tax you’ll pay is 34.32%, including the cess. If your gambling income exceeds ₹1 crore, the total tax rate for you is 35.92%, including cess.

Remember that you must disclose the profits from online casino gambling when filing your annual tax report. This is crucial for gamblers who play at online casinos not registered in India. International online casinos don’t pay taxes in the country and pay the winning in a lump sum. Therefore players must report these incomes to avoid fines from the tax department.