If you have recently hit a lucky streak at an online casino or a gaming app in India, you might be wondering how much of that prize money actually belongs to you. Gone are the days when casual winnings went unnoticed; the Indian government has tightened the screws on online gambling tax in India to ensure the house (the taxman) always gets its share.

Navigating the legal jargon can be a headache, so here is a plain-English guide to understanding casino winning tax in India and how it affects your bankroll.

The Flat Rate: No Slabs, No Mercy

Unlike your regular salary, where you only pay tax after earning a few lakhs, gambling income is treated differently.

• Flat 30% Tax: Under Section 115BBJ of the Income Tax Act, all net winnings from online games are taxed at a flat rate of 30%.
• Plus Cess: When you add the 4% Health and Education Cess, the effective tax rate jumps to 31.2%.
• No Basic Exemption: Even if your total annual income is below the ₹2.5 lakh or ₹3 lakh threshold, you still owe that 31.2% on every rupee of your net winnings. You cannot use your basic tax-free limit to offset gambling wins.

Understanding TDS on Casino Winnings

TDS, or Tax Deducted at Source, is the government’s way of collecting tax before the money even hits your bank account.

• Section 194BA: This specific section mandates that online gaming platforms must deduct 30% TDS on “net winnings.”
• No Minimum Threshold: Previously, TDS only kicked in if you won more than ₹10,000. As of 2023-2024, that limit has been removed for online games. TDS is now deducted on any amount of net winnings at the time of withdrawal.
• Year-End Sweep: If you keep your winnings in your casino wallet without withdrawing, the platform is legally required to deduct the 30% TDS on your remaining balance at the end of the financial year (March 31st).

How “Net Winnings” are Calculated

The tax isn’t necessarily on the total amount you withdraw, but on the profit you made. The basic formula used by most platforms is:

• Net Winnings = A – (B + C)
  • A = Total amount you are withdrawing.
  • B = Total deposits you’ve made during the year.
  • C = The opening balance in your account at the start of the financial year.
• Essentially, you are only taxed on the “new money” you earned above what you put in.

Important Casino Tax Rules in India to Remember

• No Set-Off for Losses: This is a big one. If you win ₹50,000 on one site but lose ₹50,000 on another, the law does not let you “cancel them out.” You still owe 31.2% tax on the ₹50,000 win.
• Winnings in Kind: If you win a car, a smartphone, or a holiday package, the tax still applies. The platform must ensure the 30% tax (based on the market value of the prize) is paid before they hand over the keys or the gadget.
• Reporting in ITR: You must report these winnings under the head “Income from Other Sources” when filing your Income Tax Return (ITR). Even if TDS was already deducted, failing to report it can lead to a notice from the IT department.

Why You Shouldn’t Ignore the Rules

With the recent introduction of the Promotion and Regulation of Online Gaming Bill (2025), the government is tracking digital transactions more closely than ever.

• AI & Data Matching: The IT department uses AI to match your bank deposits with your reported income. Discrepancies often trigger automated “nudge” notices.
• Avoid Penalties: Filing correctly ensures you don’t end up paying interest or heavy penalties on top of the already high 30% tax.