India Tax and Legal Information and FAQ

Poker is a Game of Skill and a Mind Sport, and it is legal in India.

According to the Indian Public Gaming Act, games of mere skill are exempted from the act and are considered to be legal. Various instances in the Act, such as Section 12, 13A, 13B and others refer to mere skills as being exempted from the act.

Several Indian States, such as West Bengal, Karnataka, and Nagaland have specifically recognised poker as a game of skill.

Our platform partner PokerStars is the biggest and most regulated poker brand in the world, with licenses across the globe.

A Game of Skill is where the outcome is predominantly determined by a player’s level of skill, and not chance. These include skills like logical thinking, strategic movements, memory and association of an opponent’s playing style, reading betting patterns, quick reactions and so on.

Section 194BA of the Income Tax Act requires,

The person responsible for paying (PokerStars in this case) to any person (our users) any income by way of winnings from any lottery or crossword puzzle, or card game, and other game of any sort; shall at the time of payment thereof or at the end of the financial year, deduct income-tax thereon at the rates in force (30% as of now).

TDS is applicable at the time of payment and at the end of the financial year, which is when a Player’s 'Net Winnings' are calculated.

Section 194BA provides that tax should be deducted on Net Winnings of any amount. Hence, TDS will be calculated for any Net Winnings that are > 0 at the time of withdrawal.

As stated above, TDS is calculated at the time of payment on winnings, (Withdrawal – Deposit), which is calculated at the time of the withdrawal. At the time of payment, Winnings of any amount are subject to TDS of 30% and payment to the player will be made after deduction of such taxes.

To give some examples:

Example 1 -

• A player deposits ₹10,000.
• Player uses ₹2,000 of that to play a game and wins ₹15,000.
• Their Cashier Balance is now ₹23,000 of which ₹13,000 is their Net Winnings + ₹10,000 their previous deposit.
• Player requests for a withdrawal of their total balance of ₹23,000
• The deposit amount i.e., ₹10,000, no tax will be withheld, and the player will be refunded these unused funds.
• The remaining winning amount is ₹13,000, on which 30% withholding tax will be applicable before the payment is made to the player.
• ₹3,900 will be deducted as taxes and ₹19,100 will be credited to the player’s account.

Example 2 -

• A player deposits ₹10,000.
• Player uses ₹2,000 of that to play a game and wins ₹5,000.
• Their Cashier Balance is now ₹13,000 of which ₹3,000 is their Net Winnings + ₹10,000 their previous deposit.
• Player requests for a withdrawal of their total balance of ₹13,000 INR
• The deposit amount i.e., ₹10,000, no tax will be withheld, and the player will be refunded these unused funds.
• The remaining winning amount is ₹3,000, on which 30% withholding tax will be applicable before the payment is made to the player.
• ₹900 will be deducted as taxes and ₹12,100 will be credited to the player’s account.

In compliance with the current tax policy, we are also required to finalize player accounts at the end of every financial year. This counter is reset at the end of the financial year and starts from scratch on 1^st April.

• As of 31st March 23:59 hrs, tax will be deducted on Net Winnings as per the tax policy laid out in the Section 194BA of the Income Tax Act.
• Net Winnings are calculated as Withdrawal(s) minus Deposit(s).
• This will be a fully automated process on our side and there is no action required by the players.
• This exercise will happen at the end of every financial year.

For instance,

1. Your total balance as on March 31 is ₹30,000

• Previous rolling deposit is ₹10,000.
• Net winnings are ₹20,000.
• TDS will be calculated as 30% * ₹20,000 = ₹6,000 and this amount will be automatically deducted from your balance.
• ₹24,000 will be considered as a fresh Deposit into the next financial year.

2. Your total balance as on March 31 is ₹30,000

• Previous rolling deposit is ₹20,000.
• Net winnings are ₹10,000.
• TDS will be calculated as 30% * ₹10,000 = ₹3,000 and this amount will be automatically deducted from your balance.
• ₹27,000 will be considered as a fresh Deposit into the next financial year.

3. Your total balance as on March 31 is ₹30,000

• Previous rolling deposit is ₹30,000.
• Net winnings are ₹0.
• No Tax will be deducted in this case.
• ₹30,000 will be considered as a fresh Deposit into the next financial year.