Gambling and casinos have a love-hate relationship with India. It appears as if the people love to gamble but the government hates it! Considering the amount of money that gaming brings in tax revenue, this is a very strange attitude to have. Lotteries are a bit different as they have now been legalized in close to almost half the states in India. What is the tax on lottery winnings in India? That may hold the answer to why we are seeing a more lax attitude towards lotteries.
What is the tax on lottery winnings in India?
The tax on lottery winnings is 30% and there is an additional cess added that takes it to 31.2%. This is irrespective of what tax slab the winner falls into or even if the winner does not have taxable income. In addition, this tax is deducted at source, which means you will get your money only after this 31.2% has been deducted.
For example, you win a lottery worth Rs. 1 Crore. The amount you end up getting is just over 65 lakhs.
Yes, it is still a very healthy sum but that is a big chunk of the winning that the government has taken.
This tax is applied only when the total winning amount is more than Rs.10,000. Below that amount, you do not have to pay any tax. What is the tax on lottery winnings in India? Games like Dream11 or MPL or MyTeam11 that have become very popular in India are also subject to the same tax rates.
We do think that this tax rate is quite high but that is the case around the world. Lotteries are counted as ‘free money' and so the government does not have too much opposition when they charge such a high tax rate. We also believe they should follow this same tax heavy policy and regularise online casinos and betting in the country to really make a killing.