Mr. Mayank Tater 13, May 2022

With Tata IPL 2022 streaming, cricket enthusiasts find it really difficult to keep themselves away from the fantasy sports application. Everyone is busy making money, looking for opportunities that are interesting, and putting to use their intuitive skills and understanding of the game. 

If it is your day, your team is helping you earn significant profits in no time. These applications help many people make great money and move forward with money-making. One sad part about the wins is Taxes. 

Yes, the money earned is taxed. There is a lot of confusion around the taxation policies, but relax we can get things sorted for you. 

Fantasy Sports and the Legal Proclamations Around 

  • Fantasy Sports works under The Public Gambling Act, 1867 (PGA), which prohibits all forms of gambling activities and betting on games of chance.  Basically, we have no specific law bars for online gambling in India. 
  • These games could be in any form be it crosswords, quizzes, card games, or fantasy sports. When talking about the laws regulating platforms associated with such games, Indian laws have a clear line of difference between betting games that work on chances. Fantasy sports are more skill-based games with the understanding of the game instead of mere chances. 
  • A lot of courts have now agreed to the users’ practice of skill-based analytics and understanding of the game, making the right judgments, and attention to playing a predictable role in analyzing the element of skills involved in fantasy Games. 

Example of Ruling

In the Varun Gumber case, the Punjab and Haryana high court ruled that the Dream 11 fantasy sports format is a game of skill. The Bombay High Court similarly recognized that the same fantasy sports style was a skill game.

The Rule for Taxation 

  • Winnings from fantasy sports and online betting are taxable under section 115 BB of the Income Tax Act of 1961, which is titled “Income from Other Sources.” 
  • It’s an independent Special Provision. No deduction or expenditure can be claimed against such income under Section 58(4) of the Income Tax Act of 1961. 
  • The income tax rate on prize money won in this fantasy sport is 30%, excluding cess and surcharge. 

If the prize-winning money exceeds Rs 10,000/-, the platform paying out the winning money would have to deduct tax at source u/section 194 B of the Income Tax Act 1961 @ 30. Tds deducted by the platform at the time of payment will be displayed on the user’s form 26AS.

GST on Fantasy Sports Gaming 

Since the fantasy cricket platform qualifies as the provider platform, they are bound to abide by the taxation rules and pay GST. 

Each player has to pay a simple registration cost and a percentage of that cost is used as a platform charge to generate the revenue for the online operator. 

The rest of the amount is the actionable claim or the prize money that would be transferred to the winner. 

In the current scenario, the winning amount for games of skill is not covered by particular valuation rules (Rule 31 A0 specified under GST regulations 2017), and hence falls under the GST Act 2017’s exception for GST valuation.

This winning amount is listed under Schedule III and is exempted from the GST. 

A new council is formed to study and make changes in the legal provisions that would make it easier to evaluate the services offered by these games as they reflect in a great way. 

The Aspects That Are Being Worked On Are

  1. Assess your tax burden 
  2. Determine whether the game is a skill or a chance game. 
  3. GST taxable values, i.e. gross value including prize money vs. platform fees just.
  4. Tax Rates and Other Details 

Wrapping It Up!

This is the current scenario if you want to play Fantasy Cricket in India. The Taxation rules are in favor of the users for now, but a shift in paradigm is expected at any time. If you are searching for an amazing online fantasy cricket application then allows you to play with cryptocurrency then download CT Sixer