How is TDS deducted on online gambling sites?

TDS Deduction on Online Gambling Sites: Online gambling sites have to deduct TDS for payment of any amount over Rs 10,000.

How is TDS deducted on online gambling sites?
Here's the TDS rule for online gambling site. Representative image

TDS Deduction on Online Gambling Sites: Online gambling sites have to deduct TDS for payment of any amount over Rs 10,000. Currently, there is no specific classification of assessees and codes for online gambling sites under the Income Tax Act. Therefore, activity-wise granular data in respect of taxes paid is not maintained by the Central Board of Indirect Taxes & Customs, according to the Government.

“As per the provisions of Section 194B of the Income-tax Act, 1961 (the Act), any person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle or card game and other game of any sort an amount exceeding ten thousand rupees is required to deduct income tax at the time of payment thereof, at the rates in force,” Union Minister of State for Finance Pankaj Chaudhary said in a written reply to a query in the Rajya Sabha on Tuesday (August 2, 2022).

“There is no specific classification of assessees and codes for online gambling sites under the Act. Activity-wise granular data in respect of taxes paid is also not maintained by Central Board of Indirect Taxes & Customs,” he added.

Total TDS deduction in FY 2019-20, 2021-22

According to the Central Board of Direct Taxes (CBDT) data shared by Chaudhary, more than Rs 887 crore in TDS under Section 194B of the Income Tax Act was deducted by all types of deductors in FY 2021-22. The total TDS deducted in FY 2020-21 and FY 2019-20 was Rs 760.37 crore and Rs 671.24 crore respectively.

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The Central Government has taken several steps to prevent the facilitation of money laundering and hawala transactions using online gambling sites. They include “collection and analysis of financial intelligence and dissemination of Suspicious Transaction Reports (STRs) and financial intelligence related to different kinds of transactions, including those related to online gambling activities, by FIU-IND to the law enforcement agencies concerned,” said Chaudhary.

“Further, the Enforcement Directorate investigates cases related to using online gambling sites for money laundering and hawala transactions under the provisions of the Prevention of Money Laundering Act (PMLA), 2002,” he added.

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