Business
Taxes on gambling: Winnings liable to be taxed, additional levies on casino owners
One important question that people have asked me is whether winnings from casinos and betting can be taxed and if so what would be the quantum of tax to be paid.
The answer to this question lies in Section 115BB of the Income Tax Act which lays down the rate of tax for winnings of any lottery, card games, horse-race, crossword puzzle or any other gambling or betting activity to be thirty per cent (30%).
Further, in terms of Section 194B of the Income Tax Act, for any prize of more than ten thousand rupees , tax has to be deducted at source (TDS) by the person awarding the prize.
Again it must be noted that since for the purposes of computing taxes, there is no difference between a legal and an illegal activity. Thus even illegal betting and gambling winnings would be liable to be taxed under this Section.
Also, though remittances for the purpose of gambling are prohibited under the Foreign Exchange Management (Current Account Transactions) Rules, 2000 (Schedule I), since no action is taken against betting and gambling on foreign gaming websites through Indian bank accounts, any winnings remitted in Indian bank account though illegal could still be taxed at the rate of 30% under the Income Tax Act.
Additionally it would again be reiterated that if gambling winnings are remitted in India from abroad, one could face penalties of up to thrice the remitted amount under Section 13 of the Foreign Exchange Management Act (FEMA) 2000.
Levies and taxes for casinos
Casino operators in Goa (both onshore and off-shore) have to pay a fee of 10% of the total value of chips sold or receipts from gaming machines. Additionally, offshore casinos have to pay a tax of Rs. 2000/- on admission of one person, while onshore casinos have to pay a Rs. 500/- tax on an individual’s entry.
Other than these levies, according to a Firstpost report, the Goa government charges a Rs. 5 crore/ year license fee per offshore casino.
Casinos in Sikkim have to pay a Rs. 5 crore fee for obtaining a five year license. Additionally they also have to pay a tax of 10% (or Rs. 1 crore, whichever is higher) on the total gaming revenue. The tax rate gets enhanced to 15% from the third year of operation of the casino.
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Kanna
December 20, 2011 at 7:04 pm
Dear Jay,
What you mean is that if we win from Casinos abroad say Macau, we cannot declare it else we shall be penalised thrice the amount !!
Now how do we account for it ??
Jay Sayta
December 20, 2011 at 7:44 pm
Yes, if the winnings are remitted to India you are liable to be punished with upto thrice the amount. However it must be noted that the rules are not strictly implemented if the amount remitted is not large.
Jay Thakkar
February 3, 2012 at 11:49 am
Hey Jay,
I would just like to differ on this position as under:
As per Current account rules (inter alia), no person is allowed to ‘remit’ funds a) out of lottery winnings (ie amount won in lottery in India) and b) remittance for purchase of lottery tickets, football pools, sweepstakes etc.
However, when an individual has gone overseas and has won at a casino outside India, there is no regulation prohibiting or peanlising that.
On a macro-level, it is also favourable since that Indian would bring in foreign exchange to India.
Your views on this is awaited.
Jay Sayta
February 3, 2012 at 12:08 pm
You are correct- playing in a casino abroad is not a crime and there is no punishment for the same.
However the question is when the winnings from a casino are transferred or encashed to an Indian account would it amount to a remission of funds. It is upto the courts to interpret this. If encashment of winnings is also included under remission then the fine is upto thrice the amount remitted.
Even this is not a criminal offense under FEMA, there is only civil liability and fine.
You are again correct that at a macro level this may not be an appropriate policy but then one can only argue for a change in existing provisions.
Jay Thakkar
February 3, 2012 at 1:58 pm
Just one thought.
When we read the Current account regulations, it talks only of ‘Drawal’ of foreign currency (ie foreign currency withdrawn) for outward remittance and it would be too far-fetched, i believe, for the courts to interpret this as inward remittance too.
In view of this, I believe that inward remittance of winnings from casino abroad is fully permitted and people should bring in without much issue (provided the funds from where you bet were not remitted from India).
However, as you rightly said, its for the Courts to finally interpret.
SNJ
November 28, 2012 at 5:34 pm
Jay, Excellet post.
1. Just I have two query though, when you say FEMA has a fine 3 times, is it remittence value. For example, if i try to remit $1 million, I have to pay a fine of $3 million? and if this amount has already been taxed at the source say in US by lottery agency, then I still have to pay tax here in India?
2. If I pay $3 million fine, then I get to keep $1 million or i forfiet that as well?
Thanks in advance
Peshkov
January 22, 2014 at 10:34 pm
Not really! The RBI website says, “In terms of Section 5 of the FEMA, persons resident in India1 are free to buy or sell foreign exchange for any current account transaction except for those transactions for which drawal of foreign exchange has been prohibited by Central Government, such as remittance out of lottery winnings, remittance of income from racing/riding, etc., or any other hobby, remittance for purchase of lottery tickets, banned / proscribed magazines, football pools, sweepstakes, etc., payment of commission on exports made towards equity investment in Joint Ventures/ Wholly Owned Subsidiaries abroad of Indian companies, remittance of dividend by any company to which the requirement of dividend balancing is applicable, payment of commission on exports under Rupee State Credit Route, except commission up to 10% of invoice value of exports of tea and tobacco and payment related to call back services of telephones.” Now, ‘remittance out of lottery winnnings” does not mean amount won in lottery in India. Here ‘out of lottery’ simply means ‘won by means of lottery’. It means both outward and inward remittance.
Hersh
March 30, 2013 at 9:20 am
SNJ,
I think your understanding of FEMA is correct. Per the bare act, this seems to be what the provision says. Of course, delving into the intent of the provision as very rightly pointed out by both Jays above, it seems difficult to believe why the Government and country would not benefit from an inward remittance.
For the tax withheld in the US, and with due consideration that the provisions of the India-US tax treaty should apply to you, you could stake a foreign tax credit for taxes paid in the US. Further, per the provisions of Section 90(2) of the Indian Income-tax Act, you could choose to decide whether you wish to be governed by the provisions of the Indian Income-tax Act, or the provisions of the treaty, whichever are more beneficial to you.
Trust the above prima facie clarifies.
Jay Sayta
March 30, 2013 at 9:24 am
Thanks Hersh for the insights.
SNJ
February 3, 2014 at 10:20 am
Hersh, Jay’s, Thanks for the comments.
Jay Satya,
I am kind of little confused reading so many threads. It is 2014 now and I am still looking at some blogs here. Specific question:
1. If India Resident travels to US on visitor Visa, say buys a $1.00 powerball ticket, is it legal to do that?
2. If he wins prize money, then he is not allowed to bring the prize money to India as he would violate FEMA?
3. He can keep that prize money back in US by opening US bank Account. So is it legal to hold US bank account by Indian Resident with Lottery winning in US and Does he have to declare it to local IT authority? (I am not sure how he can open an US bank account without an SSN)
4. In case of 3 is not in contention, then if he is allowed legally to bring the prize money, then due to Absence of DTAA on lottery between two countries, he would need to pay Income tax (30.9% including Surcharge and cess) here as well.
Don’t you think if it is legal to win a prize in US for Non US Citizen, then it is better to bring in Foreign funds to India which would help the country. In this global economy, where every coutry is striving to get their Forex shored up, Why is Nanny state being created, where an adult citizen understand the implication of gambling and makes his/her personal choice, Unless I am missing or do not understand the laws point of view. Is there any individual case which has been contested (any link would help) in the Honorable Court.
looking forward to your reply and thanks in advance.
Jay Sayta
February 3, 2014 at 11:18 am
There’s no case laws on the point so all your queries are a matter of interpretation.
SNJ
February 3, 2014 at 9:32 pm
Jay Satya,
Thanks. But specific to Point 1 to 4 is my understanding right?
INDIA POKER SERIES
December 29, 2011 at 12:05 pm
Jay
Is the tax 30% or 40%. Someone told me its 40% totally. If there is TDS on winnings it willl be at 30% and the assessee has to pay another 10% at time of filing returns.
Bharat Agarwalla
Jay Sayta
December 29, 2011 at 1:41 pm
The TDS is 30% flat.
INDIA POKER SERIES
February 6, 2012 at 3:44 am
I repeat my query … Is the tax 30% of 40%? The TDS is 30% which is not being disputed. Its the TAX which is being discussed.
Example … TDS on interest is 10% but that does not mean that the tax is 10%.
Jay Sayta
February 8, 2012 at 3:39 pm
For this there is provision in Section 194B of the Income Tax Act. If the amount of winnings of lotteries, card games, horse race etc. awarded to the participant exceeds Rs. 10,000/- then the onus is on the person handing over the winnings to deduct 30% tax. This is Tax Deducted at Source (TDS).
The winner can obviously take this tax paid (which is credited and the amount is deducted from his overall tax liablitiy) while filing his yearly tax return. There is no provision of tax of 30% of 40% which is a preposterous suggestion.
Thomas
February 22, 2012 at 3:58 pm
Dear Jay,
I am currently doing research on gambling laws in India and stumbled across this excellent blog. Can you tell me whether the TDS rate of 30 % has ever changed since the tax was introduced in 1972? I know that the level at which the tax had to be paid was raised from Rs. 1,000 (1972) to 5,000 (1986) and 10,000 (2010). But did the percentage ever change as well?
Thanks a lot!
Thomas
Jay Sayta
February 22, 2012 at 7:43 pm
The tax rate was changed to 30% from the earlier 40% in the year 2002 by Finance Act 2001 (with effect 1-4-2002).
john bland
March 8, 2012 at 8:42 pm
Hi Jay,
My brother won 90,000 USD in Atlantic city 2 days ago. I was searching the net and came across this thread. Now, the casino in USA deducted 30% of his winnings and paid the balance. he was issued a Form too for it. India and US has double taxation treaty. So, if he won in US and paid tax at source of 30%, he is not laible to pay any more tax in India? right? Also, can he bring the winnings to india and deposit in his bank either as cash or cheque?
Await yer answer
Jay Sayta
March 8, 2012 at 11:06 pm
That is true, except for the fact that remittances from casino winnings may not be allowed under the FEMA rules.
john bland
March 10, 2012 at 7:42 pm
So, what can he do with the money? I mean , there has to be a provision to bring this money in, if its legally won in USA. The casino can issue a cheque too to him ! Now whats the plea he can go with?
Jay Sayta
March 10, 2012 at 8:48 pm
The money can be used/deposited in USA itself or in any other country allowing where such deposits are not illegal.
Deepak
May 4, 2012 at 12:35 pm
Hi Jay,
The website is really good.
When we say that the inward remittance of any lottery or gambling winning are not allowed, why should we confuse it with Poker. As we are contending the same to be skill based game and not gambling and if thats true the provision itself should not apply to winning in poker (unlike other casino winnings).
Request your views on same.
Thanks.
Deepak
Jay Sayta
May 4, 2012 at 12:39 pm
Even remittances from hobbies and games is prohibited, thus it is wrong to suggest that poker would not be included. No distinction has been made between skilled and un-skilled games.
Deepak
May 4, 2012 at 1:13 pm
Than in that case a cricket/Chess or be any other game who wins his man of the tournament or other price or even payment for playing in county should not be allowed.
But I guess the same is allowed. And cricket is also a game.
Jay Sayta
May 4, 2012 at 1:16 pm
The word sport is not mentioned in the list. Professionally playing sports like cricket and chess may not be considered to be a hobby. Hence such remittances are indeed happening.
Deepak
May 4, 2012 at 1:31 pm
Jay,
Thanks for quick reply. But I belive poker is also not a happy (atleast for prof players who go outside just to play poker tourneys) and I believe its also a sport like any other game i.e. Cricket, chess etc.
One of my friend represents India in world bridge tourneys (another skill based card game) and I believe it is well accepted in India as sport and there are no problems getting winning of international bridge tourney to India.
But yes most of the people in India firmly belives that anything related to cards is gambling and its upto supreme court to decide wheather its gambling or not. But if it is decided that its not gambling then I firmly believe the remittance provision should also not apply to poker like any other sport i.e. cricket, chess etc.
Jay Sayta
May 4, 2012 at 1:39 pm
I agree with you, though one thing is clear: If the winnings are from a game in a casino (as it invariably is in case of poker) then the provisions of FEMA will be attracted. However if it a separate professional tournament conducted by some organisation as in the case of bridge which you have mentioned, there could not be much problem.
Deepak
May 4, 2012 at 1:36 pm
Please read hobby (wrongly written happy in first line)
Vijay
May 9, 2012 at 2:14 pm
Bit out of the context , but does routing payments & receipts through a NRE/NRO Account help in anyways ?
shravya
May 12, 2012 at 4:09 pm
I am thinking to make my first deposit in a poker site.I am a newbie so please forgive me if my questions seems too basic. You mentioned that remitting the winnings from online poker is illegal. Is it still illegal if I go to some country like UK where online poker is legal, remit the winnings and transfer here? If remittance from abroad is illegal, how is it that so many MS graduates working in US, Australia and UK are clearing their educational loans here?
Jay Sayta
May 12, 2012 at 9:12 pm
You must understand that all remittances are not illegal. Only remittances relating to gambling, lotteries, horse-racing and few other subjects are not permitted. I believe sending money for educational purposes does not figure in that list and thus would presumably be permitted.
For gambling any deposit or withdrawal is not permitted according to the rules. However the rules are not strictly followed and we see that such type of online gaming activities do take place through e-wallets like Neteller and Moneybookers.
shravya
May 12, 2012 at 10:12 pm
Thanks i got it. But for example, lets assume that an Indian played online in UK or Monaco as full time job. In UK, I read, it is legal to play poker online as a full time job. So is it still illegal if an Indian transfers winnings from UK account to Indian account? I understand that directly one cannot remit poker winnings to an Indian account. But if the player has an account in UK, remits the winnigs to his/her UK account and then transfers funds from that account to India, is that legal?
Jay Sayta
May 14, 2012 at 2:01 pm
It may be difficult to trace the amounts transferred as gambling winnings if this is done from a UK account to an Indian account. However authorities may look up into the source of funds, in which case they would be able to identify the transaction as a restricted one.
Raj
May 26, 2012 at 4:14 am
Hi Jay…
I’m from London but an indian citizen. I was in the UK for 5 years and i made 8 million pounds from gambling at casinos in 5 years. I’m planning to return back to India….
So according to the conversations in the blog, i cannot move the funds to India but let them sit back in my barclays account ???
Jay Sayta
May 26, 2012 at 1:30 pm
That is what the law seems to be saying. Again you need to understand that a lot of questions would be raised by income tax and other authorities about the source of funds since gambling/betting is synonymous with black money in India. Thus in addition to possible FEMA violations, there could be other inquiries and investigations. The best recourse would thus be to use the funds abroad as you are doing now.
SNJ
November 28, 2012 at 5:43 pm
Jay,
Doesnt this amount to holding Black money if you keep it back in the country of winning in their banks? I mean, if the funds are not allowed inside you are closing all avenues for a person to use the funds or possibly migrate out of country. “It is okay to spend in casino when you visit outside the country but you are not allowed to win large amount or any amount”.
Just curious, maybe I am not understanding how the govt. and RBI looks at it.
Thanks
Jay Sayta
November 28, 2012 at 6:15 pm
First: the fine is three times the original amount and hence presumably is only US$ 3 million in case of a 1 million dollar contravention. So you may get to keep the 1 million dollars after paying the requisite fine if that is any solace. Even if it is taxed in USA, it may be taxed again in India as there is no DTAA on the issue of lotteries/casino.
Second: Of course there are concerns of money laundering and black money in casinos but please note that contrary to popular perception it is not illegal to have a bank account abroad unless the money is untaxed and unaccounted. In this case since the money was earned perfectly legal in that country, there is no reason why it should be considered black money.
Diana
June 25, 2012 at 1:23 am
Hi Jay, i’m doing a research on india gambling tax system. Please can you let me know the reference for the casino levies because i can’t find the primary source
Jay Sayta
June 25, 2012 at 6:37 pm
Since taxes on gambling and betting is a state subject taxes are levied by the Finance Acts of state legislative assemblies, i.e. through state budgets or the tax may be through another state Act to that effect.
Vinod Bhalla
June 27, 2012 at 2:29 am
Hi Jay,
I won a lottery in NewZealand when I was there for work, for purchasing the ticket online I used the money I had remitted from my Indian Account NRE account. The winnings in NZ is taxfree. I am a NRI and an Indian Citizen. I don’t file tax return in India.
Can I repatriate the winnings back to India ?
Jay Sayta
June 27, 2012 at 7:16 pm
It is illegal to either transfer/repatriate funds for the purpose of lottery, betting, gambling etc. as per the FEMA rules. Hence the transfer would be in contravention to the FEMA rules and liable with contravention up to thrice the amount remitted.
Even if such transfer is done in contravention of the rules, you have to nonetheless pay income tax on the same at the rate of 30%. In case of a Double Tax Avoidance Agreement (DTAA) between India and New Zealand, it may be possible to not pay tax in India if the same is within the ambit of New Zealand tax laws and lottery is a subject mentioned in the agreement (which it is generally not mentioned).
tiger
August 24, 2012 at 9:18 pm
Additionally it would again be reiterated that if gambling winnings are remitted in India from abroad, one could face penalties of up to thrice the remitted amount under Section 13 of the Foreign Exchange Management Act (FEMA) 2000
does tat mean i cant use my money tat i have in my pokerstars account ??
Jay Sayta
August 25, 2012 at 8:38 pm
It would be a FEMA violation to withdraw money from Pokerstars account.
tiger
August 25, 2012 at 3:58 pm
please jay satya answer me
shravya
August 29, 2012 at 10:57 pm
i just wanna ask 1 more thing. i read about many Indian players winning poker tournaments abroad. how is it that they use those funds here? some of the winnings run upto 80 lakhs to 1 crore. so, it is definitely not a small amount to be ignored. so how is it they are bringing the funds into India?
Jay Sayta
August 29, 2012 at 11:01 pm
They may be able to bring the funds under some pretext or use/invest it abroad. Again the FEMA rules relating to repatriation of funds for gambling are not strictly implemented and may miss the attention of the tax authorities.
Maheep
September 13, 2012 at 1:37 pm
I use a Neteller INR account to withdraw funds from online poker account. The funds are converted into INR from USD by the poker site, sent to my Neteller account in INR and the Neteller account sends them to my Indian bank account again in INR (through NEFT I think as Neteller has an offcie in India and the funds come from that office to my bank account) and my bank wouldn’t need to change any currency obviously. Am I still violating FEMA? I mean the money came into India as Indian Currency and not foreign currency so FEMA should have nothing to say to that right?
Jay Sayta
September 13, 2012 at 3:39 pm
I don’t think there is any FEMA violation from your end if all transactions are in INR and you are using Neteller as an e-wallet (which can be used for gaming as well as other transactions). However, don’t know if Neteller has the appropriate clearances from RBI or complies with the regulations set by India. It seems doubtful that they have do so.
Jaisingh
October 10, 2012 at 12:01 pm
Two options come to mind for resident Indians who might have won a lottery/game on their visit to UK or any other country.. (pls correct me if am wrong)
Option 1: You could claim your winnings with the help of a local, under the Lottery Syndicate Agreement into his a/c and then have him transfer your share of winnings into your a/c in India as a gift from him. You will still have to pay gift tax, but atleast you could bring the money into India.
Option 2: You could open an a/c in that country, claim your winnings, transfer to different banks as Fixed Deposits, collect the interest in another bank a/c and then transfer the interest to an Indian bank a/c. I guess, transfer of interest from FDs is legal. Ofcourse, the principal amount will still remain there, but the interest could be brought to India.
Looking forward to comments from Jay and other members on this thread..
Jay Sayta
October 10, 2012 at 1:28 pm
I agree with Jaisingh.
Jaisingh
October 10, 2012 at 1:45 pm
Jay, which option seems more viable? (in option 1) Are there any limits in FEMA on the gift you can receive from overseas? (in option 2) Do you need to declare to ITO the source of interest on overseas FDs and will tax have to be paid on interest brought into India, received on FDs in UK/France?
Jay Sayta
October 10, 2012 at 2:12 pm
Source of funds will certainly have to be declared in any case. Remittances per year cannot ordinarily exceed US $ 200,000 per year. Tax would have to be payable in India unless the Double Tax Avoidance Agreement (DTAA) with the other country specifically includes the category of transaction where paying tax again is not required.
Jaisingh
October 10, 2012 at 2:36 pm
In case option 2 is exercised, then tax will have to be paid on the interest brought into India and the source of interest and the source of FDs will have to be declared to ITO, right? Then, will tax have to be paid in India on the Lottery winnings/now FDs also, which have not been brought into India? Do India and UK, and India and France have a DTAA?
Jay Sayta
October 10, 2012 at 2:38 pm
Yes tax will have to be paid in India. Not aware of DTA and/or terms and conditions of DTA with UK/France.
Jaisingh
October 10, 2012 at 2:48 pm
Tax will have to be paid even on the money which has not been brought into India???!!!
Jay Sayta
October 10, 2012 at 6:07 pm
No, taxes in India will only have to be paid on money that is remitted or brought to India.
Jaisingh
October 13, 2012 at 12:44 pm
I guess, Option 1 seems to be the best course of action. I wonder though how it would work if the amount exceeds $ 200,000!!
mayukh mahapatra
October 22, 2012 at 4:56 pm
Dear Jay Sayta,
I am Indian citizen and now I am in South Korea for job purpose. I usually play online lottery using http://playhugelottos.com/ and as per their website, we are a ticket purchasing agent: you play and we claim on your behalf no matter in which country you are based. So even in this case, cant I get money to India, in case of wining? In this case, its like someone is giving his money to me. I am not really playing the lottery.
Jay Sayta
October 22, 2012 at 5:04 pm
even remittance from that would be for the purpose of gambling, though it may escape liability if it does not fall under the scrutiny of tax officials.
mayukh mahapatra
October 22, 2012 at 8:22 pm
Dear jay,
Thanks for the reply. I have some small dobt.
so what is the max amount i can bring, in case of wining? or nothing? but law says, if you are playing lottery.this case, i am not playing,,some one else is playing and he is giving me money. is there any lawer can i contact,who can help me this regards?
Jay Sayta
October 24, 2012 at 11:15 am
pls read earlier comments in the thread to figure that out.
Harry
October 27, 2012 at 2:15 pm
hey jay,
this blog really got me worried so i have a question to ask.
Im going to use bet365.com to bet on tennis which is a uk based site which allows betting in INR. So does this mean that any money i withdraw from this site will be subject to be penalized under the FEMA rules of thrice the penalty which u mentioned? Or just be subject to 30% tax?
which raises another question …..that if i withdraw amounts under 10000 in one financial year i wont be taxed? or this is monthly etc. also if i withdraw say 40000 will i be liable to pay tax on the entire amount or i will get an exemption to 10000 inr?
waiting for a reply, thank you for your help.
Jay Sayta
October 27, 2012 at 2:59 pm
If the transaction comes under the scanner, there would be a penalty under FEMA rules. 30% tax has to be paid on any amount be it less or more than Rs. 10,000; only TDS need not be paid if amount is less than 10,000. But if the foreign company does not pay TDS, you still have to pay the requisite tax.
Harry
October 27, 2012 at 5:57 pm
Thank you for such a quick reply jay. But whats still unclear is that fema applies only when the remitted amount is in INR or it applies only if it is in a different currency other than INR?………then again when i think about this its not possible to remit money in an indian bank account in another currency!…….sorry just trying to make some sense of this since your blog is the only page ive found which brings into light the penalties fema could bring on online gaming since the Indian gambling laws itself dont mention this provision to curb online gaming, which is kind of a shocker.
Jay Sayta
October 27, 2012 at 6:07 pm
FEMA only applies in case remittance is in foreign currency; payments in INR for gambling are not permitted by the RBI; but in any case if payments are being allowed in INR on some websites it would be outside the purview of FEMA.
Harry
October 27, 2012 at 6:17 pm
thank you for making that clear,thats a huge load off my chest.
And thank the government for their futile gaming laws as it is easy to circumvent the non permitting of rbi, as i can easily signup with netteller and get money in my netteller account and from the neteller to my bank account thus making rbi rules irrelevant cause the money has already been remitted.
Now the question is after the money is already in my a account and when i disclose the source of these funds to income tax department to pay my taxes will i or can i be prosecuted or ill just have to pay the 30% tax?
Jay Sayta
October 27, 2012 at 6:29 pm
There should not be a problem in paying the income tax.
Harry
October 27, 2012 at 6:32 pm
Just to make it clear i wont have committed a crime in the eyes of the law? the only thing they could possibly do is to try and stop my next gaming transaction?
thank you for all your help jay, truely appreciated.
Jay Sayta
October 27, 2012 at 6:35 pm
there is no criminal offence, only a civil liability so if it does not come under the scanner of the authorities nothing can be done about it.
Harry
October 27, 2012 at 6:37 pm
thank you for all the help i can now rest in peace and continue wid bet365 🙂
Rakesh
September 24, 2014 at 1:53 pm
As bet365 and neteller is mentioned here.. One more thing needs to be clarified…. I have a neteller INR account and a BET365 INR account.. I remit INR through credit card to my neteller account fron there to Bet365 and the winnings back to Neteller INR.. From there to SB account in INR.. The question is.. Neteller asks for Swift code at the time of withdrawal.. Which means foreign remittance is being done.. What is the liability in this??? And also while depositing it funds are converted into dollars… Please let me know about the implications
Anita
November 12, 2012 at 6:59 am
My friend was on a Visit visa to the US, she bought a lottery ticket and won US Dollar 3 million , tax was deducted at source. she was given a cheque. can she deposit this cheque in India and if yes would she have to pay more tax in india.
The other thing can she open an account in the US and deposit the money.
Jay Sayta
November 12, 2012 at 11:31 am
Getting the cheque would be against FEMA rules but if so deposited without any scrutiny, income tax would still be imposed on it in the absence of any DTAA.
Account could be opened in USA and funds used over there.
Jaisingh
December 17, 2012 at 3:34 pm
Hi Jay, it is now clear that international lottery winnings cannot be brought into India. So, if an a/c is opened in France and French Lottery winnings are deposited, invested and used there, will this have to be declared to Indian tax authorities and will tax have to be paid here as well?
Also, a thought comes to mind, that all the lottery sites guarantee transfer of winnings to India. How do they manage that?
Thanks n Regards..
Jay Sayta
December 17, 2012 at 6:02 pm
If websites are making such claims, either they do not know Indian law or are making false statements.
Jaisingh
December 17, 2012 at 4:25 pm
@ Anita..
Hi, Congratulations to your friend for the amazing windfall of 3 Million USD. Its over a month since you posted on this blog. Just curious as to the options your friend finally used, did s/he bring the money into India or was it deposited in the US and invested/used there? Did s/he get a lawyer’s opinion on the options available? Your friend’s experience could be vital to the knowledge of the members interested in this blog 🙂 Looking forward to your update..
Thanks n Regards..
Jaisingh
December 18, 2012 at 2:09 pm
Hi Jay, thanks for responding to my 2nd Q. Please do respond to my 1st Q as well at your convenience..
Thanks n Regards..
Jay Sayta
December 18, 2012 at 2:22 pm
As regards to your first question, income invested and used in France or other foreign countries would not be ordinarily taxable in India.
Jaisingh
December 18, 2012 at 6:51 pm
Thank you Jay, that is very useful piece of information..
Thanks n Regards..
Jaisingh
December 18, 2012 at 11:08 pm
Jay, one more question.., can the income from this (lottery winnings) investment in France be brought into India without violation of FEMA? And what will be the tax implications if this income has already been taxed in France?
Thanks n Regards..
Jay Sayta
December 19, 2012 at 12:38 am
It cannot be directly brought to India without violation of FEMA unless it is reinvested and shown for some other purpose. If tax is paid in France and it is brought again in India, tax would have to be paid once again in the absence of Double Tax Avoidance Agreement (DTAA).
pokerguru
December 24, 2012 at 8:32 am
Fantastic blog!
I play many poker tournaments in Goa – it isn’t a hobby; I’m a full time professional poker player. It involves much skill and isn’t a game of chance like a lottery.
I have a couple of queries:
1. I hear that Supreme Court had ruled rummy to be a game of skill. Bridge, too, is apparently considered similarly. Are there different tax implications for games of chance and games involving skill (ie, lottery-like vs non-lottery)
2. If a tournament organiser has 4 tournaments on 4 consecutive days as part of one single series, where the tournament entry fee on different days is Rs 5,000 + Rs 10,000 + Rs 20,000 + Rs 30,000 and I win the second tournament with the top prize of One lakh, what is the TDS liability (the rate being 30.9%)
a. on 100k
b. on 90K (100K – 10K entry fee)
c. on 35K (100K – 65K for 4 events)
Does the organiser need to deduct on winnings each day, or winnings overall in the series, at the end of that week?
3. Are expenses deductible in the Final assessee Tax Return. These would typically be amounts spent by way of entry fees in various tournaments, travel/ hotel expenses, buying books/ periodicals to develop skills.
a. To amplify, if I spend 400K as entry fees into various tournaments and earn 500K, is the net taxable income 100K?
b. Since TDS would’ve been deducted at 30.9% (ie, 120K)and net earnings of 100K only have a tax liability of 31K, can refund be claimed (120K paid as TDS minus 31K)
c. If expenses on hotel/travel and books/ periodicals/ journals for the year amount to 50K, is that expense deductible from the net income of 100K?
Many thanks in advance
Jay Sayta
December 24, 2012 at 11:02 am
As regards to your first query, there is no difference in terms of tax laws for games of chance or skill.
Regarding your second and third queries, it all depends on how you structure the tournament and find loopholes in the tax laws: however two things are clear: if it is an all expense paid buy-in then it may be permissible to deduct expenses before paying TDS on final winnings and TDS is only to be paid on the “winnings” and not the entry fees, i.e. the prize money minus entry fees.
pokerguru
December 24, 2012 at 12:11 pm
Thank you for the response.
Regarding question 2 above – could you please specify:
Does the organiser need to deduct on winnings each day, or winnings overall in the series, at the end of that week? (Typically a series has 4-5 tournaments spread over 4-5 days and they also have a player of the series trophy rewarding the player with the best performance across all tournaments).
To repeat the example from above – If a tournament organiser has 4 tournaments on 4 consecutive days as part of one single series, where the tournament entry fee on different days is Rs 5,000 + Rs 10,000 + Rs 20,000 + Rs 30,000 and I win the second tournament with the top prize of One lakh, what is the TDS liability (the rate being 30.9%)
a. on 100k
b. on 90K (100K 10K entry fee)
c. on 35K (100K 65K for 4 events)
Many Thanks
pokerguru
December 24, 2012 at 12:14 pm
In your earlier response, you wrote:
“it all depends on how you structure the tournament and find loopholes in the tax laws”
It would be very useful if you could give some examples of some of the loopholes possible.
Thanks again!
Jay Sayta
December 24, 2012 at 12:32 pm
I don’t have an exact answer to your question because there is no settled position of law, but prime facie it seems that if there is a series of connected tournaments, buy-ins of all such tournaments can be deducted from the winnings and hence TDS ought to be deducted on 35k (as per your example).
However, I must add a caveat that I have not analysed the tax implications of this structure detail and it would be inappropriate to give you a precise answer and misguide you. Hence, I cannot also give you examples of how the Income Tax Act can be used to deduct expenses using the loopholes or other provisions.
Perhaps if you email me with your exact concerns,it would be good to discuss this interesting aspect further.
Bharat Agarwalla
December 24, 2012 at 2:49 pm
Jay
I tend to differ from you on a couple of points here. I am purely on the tournament side of things and not the cash games. In the cash games one can always claim he lost all what he won and pay no taxes as there is no way to firstly establish what he won and later there is no way to establish how much he lost. So that comes as a self-declaration.
I personally am of the opinion that the TDS is deducted on the full amount and not the net amount. The Income Tax is fairly clear on this.
Next is that no adjustments are permitted for professional or non-professional poker players. The buy ins or other expenses like travel and hotel etc etc are all paid separately and cannot get set off against the winnings.
This further means that treating it as a Series will not benefit the player in any manner.
Lastly I would like to add that in the countries the adjustments are available there the players have to quote the PAN number (equivalent to that in their country) to avail of that benefit.
Winnings from online games are also being tracked now like they did in Spain in Sept 2012 when they asked players by sending them mails to declare and explain winnings since 2008-2011.
The water is far deeper than what we all thought. Playing around (looking for loopholes) will only complicate the things further for players and may be also for organisers.
The only way this can be sorted is if players make a representation to the Govt (it comes under Central) that they should be allowed the set off then the Govt may one day give into the same if the number of people collectively make the representation is large. This happened so in Spain itself earlier this year.
Vishal.S
December 24, 2012 at 4:01 pm
@pokerguru , Well what your are asking or suggesting can be done, siting you an example form the real money poker site in India i,e http://www.adda52.com , When a player is playing on any high stakes table at this site his regular chips automatically gets converted into VIP chips. Now the site has a policy as per the tax laws that any winning above 10 k will be charged at 30 % flat. So for example if I started playing with a 10 k and got up with 19.5 k , my winning of 9.5 k is exempt from tax as it is less then 10 k , however if my total winning exceeded 10 k , the whole winning amount will be taxed at 30 %. Now taking about the other aspect with another example. What if I sat with 10 k and lost all of it and again made a buyin of 10 k , I that case the system keep a record of my negative balance and I do not have any tax liability till I have won more then 20 K , as the initial 10 K was used to off-set my loss. How ever at the end of the quater, all the vip chips are automatically converted into real chips after deducting TDS @ 30 % if applicable.
Similar approach can be used for the tournaments and the losses form on event’s buy-in can be used to off-set the winnings form other tourney and TDS can be charged on the net amount of winning instead of individual events.
sukant
December 26, 2012 at 8:38 pm
i am an india and playing international lottery like usa powerball, usa megamillion and euro million lottery through online lottery websites http://www.playhugelottos.com.as per their website, we are a ticket purchasing agent: you play and we claim on your behalf no matter in which country you are based.i am not playing lottery personally through any lottery agent. can u tell me is this legal if i won lottery through this websites then i transfer the winning amount to my indian bank account through NEFT transfer.plz reply me asap
Jay Sayta
December 27, 2012 at 10:07 am
Yes, getting winnings in India through NEFT may be in contravention of FEMA and other laws.
Jaisingh
January 8, 2013 at 7:28 pm
Hi Jay, If I was to play lottery in UK through a syndicate and win, claim through the syndicate manager/member and then have him transfer my share to India as a gift to me from him, will FEMA accept this? He would be a UK national playing on my behalf and if we win, he will transfer my share and call it a gift. Will he have to disclose his source while transferring to my a/c in India? I will have to pay tax, that’s fine. But, how will FEMA react? Look forward to your views..
Thanks n Regards..
Jay Sayta
January 8, 2013 at 7:51 pm
If the sole object of this syndicate is to invest in lotteries, then FEMA may question on the source of the funds remitted to India.
Jaisingh
January 9, 2013 at 11:03 am
Hmmm…, so that still won’t work 🙂 Thanks for your feedback..
sukant
January 9, 2013 at 11:36 am
dear jay i have 3 question:
1. if i transfer my lottery winnings to the neteller account which is in indian currency account then i transfer the money to my bank account is it possible.
2.if i transfer my lottery winnings to some foreign nations then bring india as a inheritance then it will violate the fema and other laws of india.
3.Tell me one safe and secure idea to bring the lottery winnings to india without violating all rules of india.
Jay Sayta
January 9, 2013 at 3:34 pm
For all the above three the answer is that it would fall in the grey area if the sole purpose of putting the amount through Neteller is encashing winnings from lotteries, then the tax authority can investigate deeper and impose penalties if they find out that such e-wallets or investments were only intermediaries for gambling transactions.
sukant
January 15, 2013 at 8:12 am
thnks for ur speed reply.
dear jay actually one of my friend win 40million in usa powerball lottery so that i ask u these question.He has only two months to get that amount after that amount forfeits.
if i withdrawn huge amount then they investigate if i withdrawn 20000 inr to 30000 inr per month then also they investigate or not.
1.what is the maximum amount we can transfer from abroad to india in a financial year.
2. if i send lottery money to india through western union then it can possible or i got penalties .
reply plz
Jay Sayta
January 15, 2013 at 5:36 pm
yes, if you withdraw the money from other channels such as Western Union in smaller amounts then the chances of penalty is less.
Jaisingh
January 22, 2013 at 4:20 pm
@Jay, Sukant, What if Sukant’s friend brings some of his winnings in cash into India and converts it into rupee as and when required?
Jay Sayta
January 23, 2013 at 11:26 pm
Even then it could potentially mean violation of FEMA rules.
ajay
March 1, 2013 at 7:28 am
Hi jay,
Could’t fund neteller and entropay account via master/visa/maestro card. Tried NEFT also for quick bank transfer but not successful. seems to have explored all possible options but of no avail.
suggest alternative action.
regards
ajay
Jay Sayta
March 1, 2013 at 9:57 am
Depositing through cash/cheque in Neteller account is an option.
bala
March 3, 2013 at 1:29 pm
hii jay iam having bet365 account since 11years but since six years iam living in india .i have my bet365account still in gbp since couple of months i have started using it again by depositing through ukash vochers which are available in india and else where.I have winnings in my account now bet365 says they can transfer through wire transfer to my indian bank account but in GBP.does it attract FEMA penality and does i have to pay tax,IF so as u replied in ur blog how much GBP transfer is unnoticed by FEMA and i get away.ALSO do u know any instances of such transfers which are unnoticed to a certain limit.IF i change my currency in bet365 to INR and further proceed with wire transfer by them in INR and get away with FEMA penality. kindly help me
Jay Sayta
March 4, 2013 at 4:10 pm
Even in any case, online betting on offshore gaming websites may attract FEMA provisions. Income Tax has to be paid even if it is not detected under FEMA.
bala
March 5, 2013 at 7:22 pm
hii jay india has got DTAA agrement with uk in uk winnings from betting is tax free if bet365 pays me in rupees then still i have to pay tax here?
Jay Sayta
March 5, 2013 at 7:24 pm
Unless the DTAA specifically includes gaming/casino or betting winnings, tax has to be paid on such winnings.
bala
March 5, 2013 at 7:35 pm
thank you verymuch for quick reply and clarity
mayank
March 19, 2013 at 5:29 pm
Just one question.
If i gamble in GOA or SIKKIM then i suppose i have paid tax and i donot need to pay any more tax on it?? Also that gambling money isnt black money as i have won it in india.
Jay Sayta
March 19, 2013 at 5:46 pm
Yes if you have winnings from legal casinos in India then it would not be considered black money, if they have deducted TDS and issued a certificate its fine, else 30.90% income tax on the winnings will have to be paid.
Guru
March 20, 2013 at 10:52 pm
Hi Jay. Appreciate your knowledge about the subject. Please tell all of us one safe way of bringing lottery winnings from abroad to india.
Jay Sayta
March 21, 2013 at 6:21 pm
Using the funds or investing the funds in the foreign country and then routing it to India may be a plausible option. Other option is utlising the winnings and investing the money abroad but remitting the returns from the investment through a corporate structure.
Guru
March 21, 2013 at 10:14 pm
Is it possible that my relative is the lottery winner abroad and he can gift the money to me. Is there a limit to gift i can receive? If there is a limit can we get permissions from rbi to receive more than the limit. My worry is the fema and dont mind paying the income tax
Jay Sayta
March 24, 2013 at 6:43 pm
Yes, there is a limit on value of gifts imposed by RBI, FEMA Rules etc. Please check the comments on this thread and RBI website for details.
Guru
March 26, 2013 at 10:01 pm
Thank u Jay for your prompt replies. I read somewhere. Please correct me
Nri/Pio can remit funds in india in INR without any limits. If so isnt this the best way of bringing lottery money to india
Jay Sayta
March 26, 2013 at 10:10 pm
The source of funds has to be clear and can be inquired.
Guru
March 27, 2013 at 7:55 am
If the person is a overseas citizen of india card holder with a foreign citizenship isnt it legal for him also to send some money back to india in INR. Will sources still have to be proved.
Jay Sayta
March 27, 2013 at 8:55 am
NRI/PIO remittances cannot be used to merely circumvent the FEMA Rules and to avoid liability.
saket
April 15, 2013 at 10:38 am
Section 13 – Penalties.-(1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorization s issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contrav ntion is a continying one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.
what this means
and where such contrav ntion is a continying one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.
Jay Sayta
April 15, 2013 at 11:08 am
Thanks Saket for giving the relevant provisions for penalty under FEMA.
nik
April 21, 2013 at 9:55 am
Hi Jay,
One query please: While playing on a gambling website > In a financial year say I betted twice >
bet 1 – lost 10K (betted for 10K and lost)
bet 2 – won 30K over my bet amount ( bet was 1000..i got 31000)
Q: Do I need to pay tax on 30K or 20K(30-10k)
Please advise. Thanks
Jay Sayta
April 21, 2013 at 9:58 am
Think that tax would have to be paid on net winnings that is to say, winnings minus the losses for the year (if TDS has not already been deducted).
Guru
May 4, 2013 at 10:37 pm
Hi Jay.
The best solution to enjoy the winnings of a lottery is enjoy it abroad.
Srinivas
June 4, 2013 at 2:16 am
I am a web developer who owns a blog on horse racing just as u own glaws ,i am hoping to organise a small online betting challenge on horse race as bet on it is legal in india ,i may pocket a small commision and rest will be price money(below rs 25000) . Will it attract penalty do i need permissions?
Jay Sayta
June 4, 2013 at 11:28 am
Betting on horse-racing except in race-courses with licensed bookmakers is technically an offence under the gambling Acts. However, after the 1996 KR Lakshmanan decision of the Supreme Court betting on horse-racing has been declared to be a game of skill. The decision was in the context of horse racing and betting in race courses; it is unclear whether this can be extended to other unregulated forms of horse-betting as well- but this judgment can certainly be cited in support of your proposal.
Srinivas
June 5, 2013 at 4:57 pm
Betting on indian horse races outside racecourses is considered illegal, but that applies to horse races conducted on foreign soil? Also as horse racing has been deemed along with rummy to be a game of skill, are sites like rummycircle.com illegal , do these sites pay tax?
Jay Sayta
June 5, 2013 at 5:02 pm
Not necessarily- this logic can be applied to both betting on Indian and foreign race courses. Even though an activity is declared to be a game of skill, there can still be regulation such as licensing. As far as rummy webistes are concerned, to my knowledge all requisite taxes are paid by them and there is no licensing/regulation requirement.
Srinivas
June 5, 2013 at 6:14 pm
Thnks for reply,so it seems from your suggestions that i cant do anything which i mentioned in my first post(holding a small betting contest on horse racing on the site’s first anniversery) unless it is licensed, and as law says it should be within premesis of racecourse with legal bookmakers, it seems i can never do such things online on my website in india.
Bharat Agarwalla
June 5, 2013 at 9:42 pm
In my view, the Rummy sites are running based on that SC judgement which allows rummy as a game to played and treated as a game of skill. Basically its out of the ambit of any regulation per se and this is why these sites I guess are running the show. But when it comes to horse racing, its taken as a game of skill by the Income Tax department but I am not too sure if other ACts also treat it as the same. Also I think its (horse racing) has the limitation where the law provides that the wagers be made/done thru the said bookmakers as mentioned by Jay above. All other bets are considered to be illegal. The other bets are obviously considered to be those made thru anyone else other than the said bookmakers. The official bookmakers I believe deduct the taxes before paying the winners as per the IT Act while also that the odds given by them are having big spreads which not just cover their risk but also make it unattractive for the betters. This is why the bets thru them are of small denominations but lots of bets are placed by so many people. This is more like recreational betting. The unofficial bookmakers operate over phone and take BIG bets of their clients and obviously there is no TDS involved as everything is underground. I doubt if any decent race horse costs below 10 lacs and the price can go up many folds if the breed and horse is good. The monthly expense is separate which again is not less. Not just the horse is given training but also the jockey is given the same. This is what makes it skill oriented.
Tiger
June 12, 2013 at 3:05 pm
I have over 10k$ in my pokerstars account , i want to withdraw money , indian gambling laws state tat any game with minimal skill is not considered as gambling.. So poker which is a skill game is not gambling .. So can i withdraw money from my pokerstars account , say tat the money is sport winnings ???
Jay Sayta
June 12, 2013 at 3:36 pm
You can try the method but I am not sure of any potential liability that may be incurred if the matter is investigated.
Suresh
July 12, 2013 at 12:32 am
If a resident Indian on his visit to U.S.A wins a lottery from Raffle ticket which he bought when he was transiting at dubai airport.
a)is it legal to remit back winning proceeds back to India
b)What shall be rate of current Taxes in India.
c) if not,can he remit this amount to U.S.A after opening a account with US bank.
Jay Sayta
July 12, 2013 at 11:19 am
Getting the winnings back to India, the FEMA Rules would come into picture and there may be potential penalty; subject to FEMA Rules and other policies and rules; the money may be invested abroad; if at all the winnings are brought to India then the rate of Income tax is 30.90%.
vandan
July 17, 2013 at 11:41 pm
Hi Jay,
I bet regularly on bet 365 with INR account .
I transfer the INR amount to neteller and from there to bank account in INR.
My question is what should i declare as the source of income. If i say gambling from bet365 will i be penalized or put behind bars or can i pay 30 % tax without any issues.
Also what is the penalty if the tax is not paid and what the chances og getting into the RBI radar
Jay Sayta
July 17, 2013 at 11:52 pm
Yes, taxes definitely should be paid on the amount and should be so declared; it is highly unlikely that there will be any penalty for not remitting the winnings and definitely not any imprisonment.
vandan
July 18, 2013 at 12:22 am
Just to get it clear .
you mean to say there is no problem in declaring the source of incoming as online Gambling ??
Appreciate your help
Jay Sayta
July 18, 2013 at 6:23 pm
No, that is not what I am saying; what I mean is that there could be potential liabilities and legal consequences if you declare winnings as online gambling winnings; but legally you are still obliged to declare and pay tax on the same- irrespective of whether the winnings are through a legitimate source or not.
P RATHOE
July 29, 2013 at 1:55 pm
From all above discussions(Read randamly)I understand that WIN from any LOTTERY OR GAMBLING, may be legel in the host country, shall be treated as illigle and if transfered to indian bank account shall be subject to penalty and fine at the rates stated elsewhere in above discussions. Am I right,Sir?
Jay Sayta
July 30, 2013 at 12:18 am
Yes P RATHOE correct.
Ankit
August 18, 2013 at 4:22 pm
Nice Article!
Does that means that there is no way to remit money to India, in case we have won an online lottery abroad? I have not won, but I am interested in this a lot after reading this article. I see many online lotteries provider website offering tickets online.
Jay Sayta
August 18, 2013 at 7:26 pm
It is difficult to remit money to India through ordinary channels without attracting FEMA provisions.
Jaisingh
August 29, 2013 at 4:29 pm
Hi Jay, considering all above, investing the lottery winnings in the host country seems to be the only option. In that case, will the winnings still have to be disclosed in India and tax be paid on the same, even though the money is in UK? What about tax on the earnings from these investments, can they be brought into India and how will these earnings be treated for tax?
Jay Sayta
August 29, 2013 at 9:58 pm
Yes, regarding any tax implications- I don’t think there would be any implications in India; but am no expert on the subject and secondly it would also depend on DTAA terms.
sam
December 1, 2013 at 9:20 pm
What about winning in goa’s casinos? Can we declare that as our source of income? Will it be considered as a legal income? And what percentage of income tax will be applicable on that income? Will there be any penalty on wining in goa?
Jay Sayta
December 1, 2013 at 9:22 pm
Of course winnings in Goa casinos is legal and tax is payable on winnings from such gaming activities at 30% as per Section 115BB.
sai
December 21, 2013 at 4:37 pm
hi folks, one general question..
I used to play with befair a long time ago when i was in Uk, now am in india i planning to use dat website through neteller..
1) how much money i can withdraw to my indian bank account from neteller, is der any limit?
2) i know there are some rules and regulation dat u cant withdraw directly to indian bank,since its coming from gambling, so if i sent dat money to my friends or relative who r in overseas( they have dat option sending money to friends), if they sent me through der bank to my indian acc,,will it be der any prob? …for dem since dey r staying in USa or uk, dey can prove dat got money from friend( neteller)
SNJ
February 11, 2014 at 10:22 am
Jay Satya,
I was trying to read different provisions and I have questions:
1. Can a US Citizen gift Cash through wire transfer to a relative/ non relative in India?
2. What is the limit the Indian citizen can receive as gift from a US citizen – Relative/ Non Relative?
3. Children of my father’s or mother’s sibling (1st cousin) will be treated as Relative or non relative?
4. Would you know if US Citizen has to pay any tax in US for gift make to Indian Relative and what would be the %.
Thanks in Advance.
SNJ
February 11, 2014 at 10:24 am
Sorry, for the above questions, if US Citizen transfers the Gift amount in USD, is it permitted by FEMA and does he have to declare source of Income to Indian Authority?
Deepak Gupta
February 11, 2014 at 11:57 am
Hello Mr. Jay,
First of all I would like to thank you for sharing your knowledge and continuously helping everyone with your expert advise that to since last 3 years.
Hats off!!
I am in US since last couple of years not really doing much but playing lottery and praying.
Now, after going through your blog I understand that there is no legal way to bring your winnings to India until you are ready to pay 30% income tax in india on top of 55% in US.
how about some one forms a company in US and invest in India?
or buys a office/property as overseas office in india and then gift it to his mom-dad.
or buy diamonds / gold in US and sell it in india.
there has to be a way out. no one would pay 30%+55%=85% tax to bring the money home.
will wait for your answer and suggestion
Jay Sayta
February 11, 2014 at 2:35 pm
@SNJ- yes gifts are permitted but there are limits to gifts under FEMA which you will have to consult experts/lawyers and check out the same. For other queries also it is best if you take appropriate advice from experts.
@Deepak Gupta- Yes your proposed structure would work but again you will have to consult experts in the field for exact guidance.
SNJ
February 12, 2014 at 6:50 pm
Jay,
I found this link Interesting:
http://www.slideshare.net/corporateprofessionals/gifts-oifc
http://www.femaonline.com/nricms.php?id=41
It says there is No limit for NRI or Citizen to gift their relative/non-relative. Though not sure if we can interpret this as accurate.
Deepak Gupta
February 13, 2014 at 1:58 pm
Thx Mr. Jay.
but who can we call that expert.
do u mean CA or fianacial advisor..
Jay Sayta
February 14, 2014 at 6:16 pm
Yes Deepak it could be a CA or financial advisor.
Salvesh
February 28, 2014 at 4:11 am
Dear Jay,
Thanks a ton for such excellent post & guidance. Its very useful.
If i win a lottery abroad how about my below two ideas to bring the money?
1. I open a bank account in that country, deposit the winnings, get an International ATM debit card for that account and use that card to withdraw money in India. Say for example i withdraw like various 50,000rs from different ATM(S)in India daily. I guess withdrawing using the foreign bank’s ATM card wont be come under RBI radar, Am i correct?
2.Sending money thru Western Union. ie., send like 50,000rs to various friends & relatives in India daily and collect from them.
Pls shower me ur thought on this!
Jay Sayta
February 28, 2014 at 11:54 am
There may be structures similar to this possible, but it may still amount to possible contravention of FEMA.
Salvesh
February 28, 2014 at 10:50 pm
Kindly explain me in detail regarding the my idea 1 bro. If i use foreign ATM card to withdraw money in India, will there be any probs?
Jay Sayta
March 1, 2014 at 2:28 pm
Yes withdrawing gaming winnings through foreign ATM may possibly lead to contravention of FEMA but it all depends on the way it is interpreted by the authorities.
Sirish K.
March 4, 2014 at 7:50 pm
According to FEMA Act, anyone depositing funds through neteller(through INR) to play on pokerstars and withdraw their winnings from neteller neft(INR) are in contravention to the FEMA rules. Is that correct? Also how can an Indian citizen open an account abroad?
Tashish
March 13, 2014 at 5:44 pm
Hi,
If the registered members on my website play chess among themselves and we award cash prizes to the winning members within 10,000/- then a.)are we liable to deduct TDS; and b.) Is this whose set up legal?
Thankxx..
Regards,
Tashish
Jay Sayta
March 13, 2014 at 6:56 pm
Yes playing skill game of chess for stakes would be legal except in Assam and Odisha until Supreme Court takes a contrary stand in the ongoing Mahalakshmi Cultural Association case.
There is no settled position on whether TDS will have to be deducted for chess game tournaments and whether it falls within the ambit of “any other game” and it is a matter of interpretation.
Tashish
March 14, 2014 at 1:33 pm
Thank you Jay for the input..Can you please suggest specified games which are classified under ‘illegal’ category being played online for cash prize in India….
Jay Sayta
March 14, 2014 at 1:42 pm
All games predominantly of chance will fall in the illegal category.
Tashish
March 14, 2014 at 4:01 pm
Thank you Jay!
Your suggestions are very helpful.
Kindly be more precise if possible.
By games of ‘chance’ do we mean any game in which the skill of the player is predominant???
Jay Sayta
March 14, 2014 at 6:18 pm
Games of chance means any game in which the predominant skill of player is not involved eg: roulette, teenpatti, baccarat etc.
Tashish
March 21, 2014 at 2:28 am
Just the last on this..
Please let me know the act which states the definition of online gambling.
Jay Sayta
March 21, 2014 at 9:51 am
Online gambling has not been defined anywhere and it is unclear whether Gaming Acts for physical common gaming houses would apply.
Vivek Raj
April 7, 2014 at 3:03 am
So, from the above thread and all the information i could get on the internet, what i came to know is that a Transaction with a bookmaker like bet365 is illegal whereas, doing the same using an e-wallet like Neteller is legal provided you do the whole transaction in INR. Also, it is on the safe side to pay 30% tax on the total earnings in a whole year. Please confirm.
MD
April 7, 2014 at 4:16 am
Thanks to Jay Sayta and many others for contributing such valuable information till date on this subject.
I went through all comments and we have people that will use NETELLER INR accounts to avoid FEMA , use locals to send gifts, deposit money in FD’s offshore and then transfer interest credits to homeland, buy gold, diamond jewellery offshore and bring them to homeland to sell it back and finally buy assets (property etc.) in homeland using offshore funds as overseas office and then gift it to their blood relations in homeland.
What I would say is among all of above if I would have to rate which one is fairer and safe, I would personally go with the “interest credits idea” but when I googled “interest rates on FD’s in USA” since most of the queries mentioned USA in them , I found its mere 3.5% :'(
So, It may be safe heaven but its impractical even after applying USD->INR conversion rates unless one has millions in USDs. Its impractical for someone who has won $10k lottery, $10k is not a small amount but its a wait of entire annual year to get just 21000 INR!!!!
Now my question,
If interest credits can be brought to homeland securely without hassles then what if we use our offshore funds to purchase assets (say property) in that country itself and then sell those assets back to get funds and then transfer these funds through legal channels to homeland?
The funds are now no more originated from gambling or margin trading source, they are originated by selling my offshore asset, also one could could claim, yes I did had gambling funds but I never remitted them to my homeland!
Could this trick suffice over all laws?
Jay Sayta
April 7, 2014 at 8:41 am
@Vivek Raj- it could work.
@MD- tax authorities may probe source of funds so this may not be sufficient, it may be best that you consult a taxation expert/Chartered Accountant for a workable structure.
RAHUL SHARMA
June 19, 2014 at 11:53 am
Hi,
If i wanaa to pay tax on winning amount to indian government,online betting on sports is safe or not through offshore companies like bet365,williumhill.Sorry for a question but i am a confused ,please tell me.
Jay Sayta
June 19, 2014 at 1:25 pm
There is a possibility of being charged with FEMA violations if you show winnings from offshore online gaming websites. However, apart from that there is no criminal liability or any concerns about authenticity etc. if you play on licensed online gaming websites.
RAHUL SHARMA
June 23, 2014 at 10:48 am
According to me, gambling on horse racing in india is legal then my 1st question online betting on international horse racing is legal or not through offshore online gaming websites.And 2nd, online betting on indian horse racing is possible or not.
Jay Sayta
June 23, 2014 at 11:20 am
Horse-racing in specific states is allowed in race courses by statute but law is silent on whether it will be allowed online. The same FEMA restrictions that apply to other forms of gaming will apply to horse racing on offshore gaming websites.
chetan
November 17, 2014 at 10:53 am
Hi Jay. I need help regarding withdrawing money from adda52. I started with 10 k and made it 19.9 k. Now i wish to withdraw 9.9k and then start playing till i reach 19.9k. Will there be tax deduction on this 9.9 k that i wish to win?
Prasad
July 5, 2014 at 7:10 pm
If money remited in INR(Eg:-bet365.com)
It is not violation of FEMA?COrrect?
RAHUL SHARMA
July 24, 2014 at 11:04 am
Hi,
Online betting on international horse racing in sikkim is legal or not.
RAHUL SHARMA
July 24, 2014 at 11:06 am
Please suggest me any advisor for online betting on international horse racing in India.
suman
August 7, 2014 at 9:45 am
hi jay
i am depositing money to bet365 in these steps,
frst from my bank to neteller,
then from neteller to bet365
all these transactions are in INR.
so is it against the fema rules
do the rbi scanner come to know if i do these steps,
withdraw my amount from bet365 to neteller in INR, transfer this amount to other neteller(ppl like exchanger)
then the exchanger sends equal amount from his bank to mine??
how to pay taxes of 30%,i mean procedure please??
Rakesh
October 4, 2014 at 11:42 pm
When you deposit from your bank account to neteller (Though both are maintained in INR) there will be a conversion from INR —> USD—> INR…. this is what happened to me when i deposited through credit card. So i guess FEMA is very much applicable….. Please correct me if i am wrong
Charlie Thomas
November 8, 2014 at 3:49 pm
I am an NRI, I am playing online lottery thru http://www.playhuglotto.com. My question is that, if I won lottery of worth $ 1 million. Do I allow to transfer this money to my NRE Account is it legal, if yes then what tax % should I need to pay or if it is illegal how can I transfer this winning amount to India.
Andy
November 14, 2014 at 2:00 pm
If I have own over a million dollars in a casino at singapore on a card game can I bring back the money and remit the same into my Indian account. What is the procedure
joni
November 20, 2014 at 1:07 am
Question important . I transfer money to entropay .. Play in bet365. Now use it to buy stuff . Legal or illegal and what are the tax implications. Same thing with winnings abroad. Fema violations or just import tax ?
Please answer.
joni
November 20, 2014 at 1:12 am
As in can I use my winnings abroad say 3000usd to purchase a laptop. Now bringing the laptop do I have to pay tax ? Have any idea how much ?I can easily sell the laptop in India and make money back. Appreciate your help.
Jay Sayta
November 20, 2014 at 10:10 am
It could still potentially violate FEMA, even outward remittance of money for gambling could be a FEMA breach.
kota
November 21, 2014 at 7:50 am
hi,
i am using neteller(INR) account for betting in bet365(INR)account.now i want to withdraw a money of around 4 lakhs to my indian bank account….
plzz suggest me whether it is illegal to withdraw?
are there any chances of getting caught by government?
is it advisable to withdraw such a huge amount in a single transaction?
what is the maximum amount per day/month/year i can withdraw so that the banks and government does not focus on my transactions?
plz share your views ….considering the present status of implementation of rules and regulations by govt.of india
chetan
December 13, 2014 at 1:23 pm
Hi Jay. I need help regarding withdrawing
money from adda52. I started with 10 k and
made it 19.9 k. Now i wish to withdraw 9.9k
and then start playing till i reach 19.9k. Will
there be tax deduction on this 9.9 k that i wish
to win?
Sumanta
December 25, 2014 at 8:45 pm
Sir, I have a question. If I invest in ‘Binary Option’ trading ( derivative instrument) , legal in Uk , Us and earn some profit and remit it to my Indian a/c , then will it be violation of FEMA act ?
waiting for your reply.
Gaurav
March 14, 2015 at 9:24 am
I use bet365 for sports betting….so my question is that – when I transact 1 crore INR from neteller to an Indian account…..would it be a crime? Or I simply have to pay 30% of tax on that?
Harish
March 21, 2015 at 1:22 pm
hello jay
I want to know that if I withdraw funds from betvictor to neteller and then neteller to Indian bank account. then is there can be any problem for me in future .
baalu
March 30, 2015 at 12:44 am
Dear sir,
Thank you for all your valuable answers. I would like to know a solution for this scenario!!
1) . Say I am betting on sports via., BET365.com & I had won around 2 crore indian rupees.
2) . Now I got to transfer the money to my Indian bank account from bet365
3) . Say I got a NETELLER account & I transfer the 2 crore Indian rupees to the neteller account
4) . Then I transfer the money from NETELLER to my local Indian bank account.
5) . It is assumed that all the transactions made are in terms of Indian rupees.
6) . And I file tax returns @ 30% if 2 crore Indian rupees & I pay a tax of 60 lakh indian rupees.
Now do you find any LEGAL violations in the above transactions!!? If so what is it about?.
I could say it would be the source of income. And it is to be noted that the money is transferred in terms of inr all through. No foreign currencies involved.
Will I face any troubles from the tax authorities? I live in tamilnadu sir.
Can you advice on the above scenario? Thank you sir.
Anis Kothia
May 5, 2015 at 10:54 am
Hi bro,
If my friend in U. S. A PAYS FROM HER ACCOUNT AND PLAYS FOR ME IN MY NAME. I M NOT SENDING ANY MONEY IN ANY FORM FROM HERE. AND THEN IF I WIN THE LOTTO HOW DO I REMIT IT.
pavan
May 7, 2015 at 2:27 am
Hi,
I am pavan..i will use neteller for depositing money to bet365.and now i won 2crores
in my neteller account and in INR currency. How can i transfer it to my indian bank account and it will creates any problem.?
One more question i asked one person if i transfer huge money the bank people will ask the source of income and he suggested to withdraw money by third parties( like currency exchange) they have license to do this transaction and tax paying is also not requied.. it is correct…? Please suggest
me how could i take that money…?
Webel
May 17, 2015 at 6:21 am
Hello,
I wanted to ask if somebody goes to a foreign country on a tourist visa, can they engage in online gambling with the foreign currency they exchanged from India (for example rupees to dollars). Would it be a violation of FEMA. If yes would it also be for a student studying abroad if he gets foreign currency (money for groceries and amenities) through bank which they use for online gambling.
Thank you
kookagada
May 21, 2015 at 11:27 pm
No good for the game
Parvez
July 1, 2015 at 5:59 am
I have a question. Lets say i have won Rs60000 by playing online roulette & i transfer my money to an e wallet based in UK then transfer money to my Indian account.is it illegal? How much tax i have to pay? Please answer as i have no idea about all these tax things.
Pranav
July 25, 2015 at 11:44 pm
Dear jay,
i have a small query. If i won 9900 rupees ina skill game contest. Then i withdrew the money to my bank account. Later agai i won rs. 250 and then again i won Rs. 5000. What will be the tax regime n how will it be deducted?
Manoj pareek
August 14, 2015 at 11:32 am
I need few details..
Oneline game like zynga poker usa based need license from indian govt to operate
Does it has to pay tax in any form.. Total revenue from i dia or service tax or tds
As per indian article online grambing is prohibited
kumar
August 30, 2015 at 8:26 am
Hi jaysatya ,
Firstly thanks for your valuable time.
Did any body caught under FEMA VIOLATION in India.
Friends u heard about any such cases
kumar
August 30, 2015 at 8:27 am
Firstly thanks for your valuable time.
Did any body caught under FEMA VIOLATION in Indiafor playing at bet365
Friends u heard about any such cases
vinay
October 6, 2015 at 5:04 pm
I want to know that suppose I win online lottery in USA,so what is the best way to get the money won safely to my Indian account?
Zen
October 14, 2015 at 5:19 pm
Hi Jay,
If one wins 1 million dollars from the dubai duty free raffle, what is the procedure to remit the money to resident Indian savings account? Is it legal?
Saurabh Agarwal
November 9, 2015 at 7:39 pm
I have won a mobile worth 40000rs.
i have paid 30% tax for that, that is around 12000rs
i’m a student, i don’t have any other income.
so can i claim back this tax money ??
Jay Sayta
November 13, 2015 at 8:55 am
No you can’t claim refund.
Nikita
December 1, 2015 at 10:26 pm
So if win cash prize in usd in a giveaway how tax would I have to pay
Parth
December 18, 2015 at 8:03 am
If I m playing online lottery of USA…I win then possible way to bring money in india….without any trouble…if I play indian lottery then also there is crime
Padmore
January 10, 2016 at 4:54 am
Hi Jay Sayta,
Iam a NRI working in Africa. If I won 1million USD in Dubai online raffle. can I deposit that money in my bank account in Malaysia and from My Malaysia account can I regularly transfer small amounts say 30,000 USD every month to my Indian NRI account.
By this way can I transfer the 1 million USD won in Dubai online raffle?
Shivam
May 18, 2016 at 5:04 pm
I Am Not In Agreement With Jay Sayta When He Says FEMA Restricts Horse Race Betting On Online Sites, FEMA Says Remittance From RACING/RIDING Not Betting On Racing/Riding, Racing Can Be F1 Racing, Motorcycle Racing, Riding I Agree Means Horse Riding But It Does Not Say Betting On Racing/Riding.
chirag
May 22, 2016 at 1:10 am
hey i play online poker on adda52?
it has a certain ule hat if u play on vip table it would deduct tax and i fu play on non vip tables it wont..
but one can win lakhs of rupees on non vip tables as well and adda52 wont deduct any tax and give me all money
so, am i suppose to pay the tax to govt and what if i dont?
ram
June 7, 2016 at 4:55 pm
Hi Jay
I have question I lost money in card games in one online website but same time some wiinnings also happend for those winnings above 10000 they did TDS but overall financial year i lost max, so can i claim tax return for those paid in TDS
omkar
June 24, 2016 at 12:10 pm
Dear sir,
Thank you for all your valuable answers. I would like to know a solution for this scenario!!
1) . Say I am betting on sports via., BET365.com & I had won around 2 crore indian rupees.
2) . Now I got to transfer the money to my Indian bank account from bet365
3) . Say I got a NETELLER account & I transfer the 2 crore Indian rupees to the neteller account
4) . Then I transfer the money from NETELLER to my local Indian bank account.
5) . It is assumed that all the transactions made are in terms of Indian rupees.
6) . And I file tax returns @ 30% if 2 crore Indian rupees & I pay a tax of 60 lakh indian rupees.
Now do you find any LEGAL violations in the above transactions!!? If so what is it about?.
I could say it would be the source of income. And it is to be noted that the money is transferred in terms of inr all through. No foreign currencies involved.
Will I face any troubles from the tax authorities? I live in tamilnadu sir.
Can you advice on the above scenario? Thank you sir.
suresh
July 23, 2016 at 1:37 pm
Dear sir,
Thank you for all your valuable answers. I would like to know a solution for this scenario!!
1) . Say I am betting on BET365.com & I had won around 2 lakhs indian rupees.
2) . Now I got to transfer the money to my Indian bank account from bet365
3) . Say I got a NETELLER account & I transfer the 2 lakhIndian rupees to the neteller account
4) . Then I transfer the money from NETELLER to my local Indian bank account.
5) . It is assumed that all the transactions made are in terms of Indian rupees.
6) . And I file tax returns @ 30% if 2 lakh Indian rupees & I pay a tax of 60 thousand indian rupees.
Now do you find any LEGAL violations in the above transactions!!? If so what is it about?.
I could say it would be the source of income. And it is to be noted that the money is transferred in terms of inr all through. No foreign currencies involved.
Will I face any troubles from the tax authorities? I live in tamilnadu sir.
Can you advice on the above scenario? Thank you sir.
shahanshah alam
September 28, 2016 at 3:04 pm
Dear sir,
Thank you for all your valuable answers. I would like to know a solution for this scenario!!
1) . Say I am betting on sports via., BET365.com & I had won around 2 crore indian rupees.
2) . Now I got to transfer the money to my Indian bank account from bet365
3) . Say I got a NETELLER account & I transfer the 2 crore Indian rupees to the neteller account
4) . Then I transfer the money from NETELLER to my local Indian bank account.
5) . It is assumed that all the transactions made are in terms of Indian rupees.
6) . And I file tax returns @ 30% if 2 crore Indian rupees & I pay a tax of 60 lakh indian rupees.
Now do you find any LEGAL violations in the above transactions!!? If so what is it about?.
I could say it would be the source of income. And it is to be noted that the money is transferred in terms of inr all through. No foreign currencies involved.
Will I face any troubles from the tax authorities? I live in tamilnadu sir.
Can you advice on the above scenario? Thank you sir.
rohit
November 4, 2016 at 9:50 pm
hallo sir i want to know if i won casino amount online of any international country then is it illegal to transfer india in account and if i pay tax then how much i have to pay if the amount is more than 5lakhs
Imam
November 13, 2016 at 8:39 am
I have used a e-wallet EntroPay to fund my betfair account for cricket betting. Now I have won USD 245,000 over the course of last 5 years. Now if I get this amount into my EntoPay account and in turn they do a NEFT transfer to my savings account, is it just taxable @ 30% or considered as illegal income under FEMA?
Ashish
November 23, 2016 at 5:18 pm
1.Sir, I want to know is it legal to purchase tickets online of foreign lotteries (megamillion and powerball) from online concierge ticket services websites (lottoland and thelotter etc.) in India?
2.If it is legal then how can I pay for the tickets as they accept payment from Neteller , Skrill and so on.
But these sites are declining my payment when uploading money on these sites.
3.On chatting with customer care executives of Lottoland and Thelotter, both said it is legal but for payment I have to ask my bank authorities.
4.Lottoland gives a free ticket for its customer for first time, if won on that ticket can winning money be brought in India?
Please, do put your thoughts on this.
Thanks.
Phani surya
February 24, 2017 at 8:37 pm
Hi jay. Is it OK to bet same amount on bet365 by the below process.
Bank-neteller-bet365-neteller-bank.
Does it mean violating FEMA guidelines?
Mohan
March 15, 2017 at 7:17 pm
Hi Friends,
If you transfer betting money from neteller to your indian account the bank will ask so many questions and will ask the neteller statement to find the source of money. not sure what happens if we tell the amount is from betting source.
Venky
July 18, 2017 at 11:51 am
my client playing online games amounting of Rs. 850,000/- same things change, his was wining amount of Rs. 316,897/- tds 95,069/-, we taken in IT Return Nett amount or gross amount please tell to correct amount