Tax Reforms Which Indian Poker Industry Needs in Union Budget 2016

Tax Reforms Which Indian Poker Industry Needs in Union Budget 2016

This is a guest contribution by Mukesh Choudhary is a the Editor-in-Chief for If you would like to submit a contribution please contact Bill Beatty for submission details. Thank you. 

The National Democratic Alliance (NDA) government of India is all set to present the union budget for 2016-17 on 29th February and alike other sectors, the poker and gaming industry is hopeful of supportive reforms. The tax on poker winnings has been absurdly high in India and with the increasing market size and the growing number of professional players; everyone wants the slab to be expanded as well as percentage to be decreased.

Tax Reforms Which Indian Poker Industry Needs in Union Budget 2016Current Scenario

Section 115BB of the Income Tax Act imposes 30% Tax on the winnings from poker or any card game. Section 2(24)(ix) expands the taxation umbrella to lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever. The organizers of the game (online and offline) is responsible for deduction of tax and furnish TDS certificates to the players. At many instances, poker players as well as operators have raised their voices against high tax rates but the authorities had left everything unchanged.

Expectations of the Industry from Budget 2016

The poker industry of India has grown at an unprecedented rate in 2015. Live poker scene improved in the country with several new poker rooms opening in Bangalore and Kolkata while the online poker sites increased the reach of the game. The growing prize pools in tournament example INR 10,000,000 in DPT Main Event is heavily cut down by the applicable 30% TDS. With the growing revenue of the Government of India from this market, players want the tax slabs to be upped and percentage to be decreased.

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, a large section of the industry is not satisfied by this figure and want it to be 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. This will help players in terms of a better Return on Investment (ROI) while playing poker as well as more money getting in the ecosystem.

Responsibility of Operators and Players

In 2015, we saw CBDT circular which required 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. As the industry awaits positive changes in the 2016 Budget, the operators and players are also expected to adhere to the laws. All the poker operators, be it online or live must follow the IT rules for TDS deduction and add to the revenue of the government under defined laws. Any incident of tax fraud may lead to strict regulation for the culprit as well the entire industry. Meanwhile, player too shall abide by the tax laws and refrain from crossing over the line of Indian laws including Income Tax Rules and Foreign Exchange Management Act (FEMA).

Mukesh Choudhary is a the Editor-in-Chief for and a special contributor to reporting on the Indian Gambling industry.