On 29th February 2016, the NDA (National Democratic Alliance) of India presented the union budget for 2016-2017 which unfortunately did not meet most of the expectations of the gaming industry. As heavy tax is levied on the gaming industry, gaming lobbyists were pushing for a change taking into account the constantly expanding market.
However the new budget brings no respite to the fledgling gambling industry in India. According to Section 115BB of the Income Tax Act, 30% tax is levied upon winnings made from games that range from lotteries, crossword puzzles, card games and other varieties of gambling. TDS (Tax Deduction at Source) certificates are issued to players by organizers who are responsible for making the necessary deductions. In spite of the pleas raised by organizers and players regarding high tax rates, the budget has not brought a panacea to the problem.
Considering the fact that 30% TDS will result in a heavy cut down on winnings, a sizeable part of the poker industry has expressed discontent with the current situation. The Easwar committee draft report had earlier proposed raising the threshold level from Rs. 10,000 to Rs. 15,000. However, the industry in general is of the opinion that Rs. 50,000 should be the optimum level that ought to be fixed.
Echoing this sentiment, Mr. P.K. Jain, Head of Operations of Sachar Gaming Pvt. Ltd, has lobbied for bringing down the TDS to 10-15% with the threshold starting from Rs.50, 000. Mr. Jain as well as others in the industry believes that this move will result in circulating money in the system as well as increasing the player’s ROI (Return on Investment).
As far as the poker industry is concerned, strict adherence to rules is to be expected under the current circumstances. The CBDT circular that came out in 2015 required anyone using virtual cards in order to access online games on international sites to declare earnings made from those sources. Poker operators must pay allegiance to the IT rules and TDS deduction laws in order to be able to continue to operate legally in India.
Players are also required to adhere to laws put forth by Indian the Indian government such as Income Tax Rules and Foreign Exchange Management Act (FEMA). The poker industry for now will have to continue with existing tax laws and be patient as the government will most likely wait to review the Easwar Committee’s final recommendations before making a final decision on amending gaming taxes. The final report is expected to be submitted before the end of 2016.