Black Money is something which any person/company/industry doesn’t want to associate with and this time it’s online gaming players under the scanner. The money transaction for online gaming which includes online poker on foreign websites has always been in an aphotic zone in India. A number of websites accepts direct transfer while many others process money transfers through online wallets. Indian players who play on such websites channelize their winnings to their Indian account with the help of the e-wallets like Neteller and Skrill. With the rise in popularity of online games especially poker in India, the volume of money being transacted through such e-wallets have scaled up tremendously in past few years.
Although, most of the professional poker players of India might have been declaring their income from such winnings, the money transacted through these e-wallets has always been under the radar. However, things are about to change with the new directives coming from the Central Board of Direct Taxes (CBDT) under the “Black Money Act” which states that anybody using e-wallets or virtual cards for fund transfer on online gaming sites hosted in foreign countries must declare the incomes from such sources.
In its Circular No. 15 titled “Clarification on Tax Compliance for Undisclosed Foreign Income and Assets” issued on 3rd September 2015, CBT states:
Any Indian citizen holding such e-wallets accounts needs to declare such incomes and assets and will be required to pay 30% tax plus a penalty on the top. It would be noteworthy to mention here that, Indians are prohibited to transact Indian currency on foreign poker sites like PokerStars, Full Tilt, 888 Poker etc. through any channel as per Schedule I of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 as it involves the dilution of multiple currencies in the game. Anybody proved guilty under this act could be fined upto 3 times the total amount and may also be subjected to legal punishment.
Indian poker players have been doing excellent at the virtual felt on foreign poker sites in recent years. They have established India among one of the emerging poker nations in Asia and globally with some ground breaking records. With the new CBDT regulations, Indian players have come under the scanner and will need to adhere to the directives in effect. Paying 30% tax on the total income traced through e-wallets plus a fine over the total amount will be a big blow to the bankrolls of Indian players. OPN contacted a number of Indian players and tried taking their views on the subject.
A Bangalore-based player (unwilling to publish the name) said, “I’ll continue playing on sites like PokerStars, Full Tilt etc but, close my e-wallet accounts. Although regulations have been set up but, it will not come in effect so quickly. I’ll wait for what others do and then decide my next steps.”
Most of the players may agree to pay taxes on their winnings on foreign sites as they do when playing on Indian poker sites like Adda52.com, Khelo365 etc. but, a fine imposed on them wouldn’t please this community.
Once all the e-wallet accounts are traced or declared voluntarily and taxes paid, the volume of Indian action on the foreign sites may decline drastically. Moreover, the authorities may push for complete cessation of such online games being played on foreign sites from India with FEMA already in effect. This may steer the online poker industry towards ring-fenced games in coming days in India. In such scenario, the Indian players may play and transact money on sites accepting only the Indian currency adhering to the taxation policies of the Government of India.
Indian gaming industry which has seen a surge in recent years will become a potential source of tax for the Indian Government. Moreover, functioning under the guidelines laid by the authorities and progressing towards a completely legal framework will help Indian i-gaming industry prosper in coming days.
Stay Tuned to OPN India for further updates on this subject.