Under the Income Tax Act, 1961, casual income refers to income that is received on an irregular, non-recurring basis. Such income is characterised by its erratic and non-recurring nature.
New Delhi: The Board of Control for Cricket in India (BCCI) has suspended the Indian Premier League (IPL) for a week because of tensions between India and Pakistan after Operation Sindoor, under which the Indian Armed Forces targeted several terrorist establishments in Pakistan and Pakistan-occupied Kashmir (PoK). Many people are waiting for the IPL tournament to restart as they would get the opportunity to make money through sports betting apps like Dream 11 and My11 Circle. But are you aware of the income tax rules applicable to the casual income or income made through these betting apps?
What Is Casual Income?
According to experts, the money earned by an individual from lottery, card games, online gaming, online sports betting, horse races, crossword puzzles, etc., is considered casual income for income tax purposes.
Under the Income Tax Act, 1961, casual income refers to income that is received on an irregular, non-recurring basis. Such income is characterised by its erratic and non-recurring nature.
If you have been making money creating fantasy teams on Dream11 or My11Circle, here is how much tax you will have to pay.
Casual Income Must Be Disclosed In ITR
Earnings from online gaming and sports betting are subject to a special tax rate under the “Income from Other Sources” as per the Income Tax Act, 1961. Section 56(2)(ib) and Section 2(24)(ix) of the Income Tax Act clarify that such earnings will be classified as income and must be shown in the “Income from Other Sources” section in the ITR form.
Income Tax Rate On Earnings From Online Games
As per the Income Tax Act, online gaming, sports betting and other casual income are taxed at a flat 30 per cent. This tax is levied under Section 115BB and Section 115BBJ.
Section 115BB: Applies to earnings from lotteries, crosswords, horse racing, cards or other gambling/betting.
Section 115BBJ: Applies to earnings from online games. Apart from this, surcharge and 4 per cent health and education cess are also added. TDS is applicable on such prizes under Sections 194B, 194BB and 194BA.
Any amount won from online games is taxed at a flat 30 per cent + surcharge and cess, and TDS is also deducted at the same rate.
