TDS Tale of Indian Poker Sites

Tax Deducted at Source (TDS) has been a topic of discussion for years in Indian poker community as it impacts the ROI of players. However, the amount deducted as TDS goes to the Government of India which is used for nation’s requirement and development. Indian poker players pays 30% TDS on any winning above Rs 10,000 in compliance with the Section 115BB and Section 194B of the Income Tax Act.TDS-online-poker-india

With mushrooming online poker sites in India, players are often lured by several promotions out of which “Non Deduction of TDS” tops the list. It would be noteworthy to mention here that the companies running the games are compelled to deduct TDS as per Section 194B of the Income Tax Act and submit the same to the Government with the player’s PAN and other details. Going further, Section 203 of the IT Act directs the company to provide TDS certificates to the players against all their deductions.

A company may willingly not deduct the TDS amount from the player’s winnings as a promotional offer. However, the company must submit the absolute TDS amount to the Government with the player’s details from its own budget and provide TDS certificates to the players. Hence, non-deduction of TDS from the player’s poker account doesn’t end the story as the company is liable to complete the procedure as per the IT Act.

Any online poker site claiming to waive off your TDS and not providing you the TDS certificate is attracting legal implications.

As per Sections 201(1A), 221, 276B of the Income Tax Act, the organisers of the game may be prosecuted for not deducting TDS and would require paying the entire TDS with interest and other penalties. Non-adherence to these sections may also lead to a maximum punishment of seven years imprisonment and fine. Anyone can view his/her TDS deductions of the entire year in Form 26AS and use it for Income Tax filing.

The booming poker industry of India needs a support from the government by tax reforms for this domain. The draft of the Easwar committee report has suggested increasing the TDS threshold to Rs. 15,000 from the current level of Rs. 10,000. However, this will not be sufficient as needs to revised to an optimum level of Rs. 50,000 as suggested by PK Jain, head of operations of Sachar Gaming Pvt. Ltd. Mr. Jain has petitioned for lowering the TDS to 10-15% on skill games earnings with the bracket starting at Rs 50,000.

The government should also bring changes to consider the losses of a poker player while calculating the final taxes similar to the provision for share traders. India needs a transparent and industry oriented taxation system for the growing skill game market.

The poker community of India should put their requests forward to the Finance and Income Tax department of India to derive the maximum benefits for the players. Meanwhile, players should also beware of such poker sites which fake the submission of TDS risking everyone in the ecosystem.