In short, you do not have to worry, as any lottery prize will still be amazing after the deductions. However, you must be conscious of your obligations and how much you will actually have in your pockets.
What Is the Best Low-Tax Lottery Site in India?
Let’s understand which reviewed lottery site in India offers the best tax conditions. The table below considers, in addition to possible website commissions and fees, the deductions on MUSL (Multi-State) games from the US when present on the lottery site. If you do not wish to play Powerball, Mega Millions, Cash4Life, and similar games, you can disregard the “Total” column for MUSL games.
If you win more than ₹10,000, you are subject to the Indian Income Tax plus other deductions calculated below. The percentage under the “Total” column is how much of the top-tier prize you would receive.
| Lottery Site | Commissions/Fees on Winnings | Total After Taxes for MUSL Games | Total After Taxes for Other Lotteries |
|---|---|---|---|
| Lottofy | 0% | 49.53% | 68.8% |
| theLotter | 0% | 49.53% | 68.8% |
| LottoSmile | 0% | 49.53% | 68.8% |
| LottoAgent | 2-5% | 39.21% | 57% |
Other important information:
✔️ No one receives 100% of the announced jackpot anywhere, unless in the case of annuity prizes in countries with no lottery taxes. However, you can avoid commissions and deductions that are higher than necessary.
✔️ MUSL games like Powerball and Mega Millions have around 40% deducted from the top-tier prizes (1st, 2nd, and 3rd) to simulate the prize an American would receive.
✔️ Cash4Life’s deduction for being a MUSL game is usually around 32% instead of 40%.
✔️ The Indian income tax applicable to any lottery winnings above ₹10,000 is 31.2%.
✔️ theLotter deducts 20% from SuperEnalotto 1st, 2nd, and 3rd prizes.
How Does Lottery Tax Work in India?
India taxes all lottery winnings above Rs. 10,000 with no exceptions. According to the Section 56(2)(ib) of the Income Tax Act of 1961, “Income From Other Sources”, which was amended by the Finance Act of 2001 to include “online game” formats:
‘Lottery’ includes winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever, under any scheme or arrangement by whatever name called;
If you win less than Rs 10,000, there is nothing to be concerned about. If otherwise, the tax that once was 30.9% was raised to 31.20%. While the Indian government charges a flat rate of 30.00%, there is a 4.00% education and health cess as a surcharge. The result is minus 31.20% for all your big jackpots.
In the case that the amount is not automatically deducted from the winnings, never try to hide that fact. You will be responsible for filing the correct forms and paying the due income tax, and it is suggested to do so before spending the money. If you have played lottery online, the website of your choice will help you out with instructions.
Indian Government Taxes on Lottery Winnings
When you play the Government lottery in India, you are subject to all of the rules above, except that you will not have any further deductions. You will be able to play your state lotteries and be required to pay 31.20% on lottery winnings above Rs 10,000.
It will not impact your regular income tax, as those are calculated separately. Therefore, your total taxes on your regular income will not rise and the tax on lottery winnings will not be impacted by your sources of income.
Online Lottery Tax in India
You might have gotten surprised when you understood that you could have your prize reduced much further depending on the type of online lottery that you play. I was in your shoes many years ago, but it is quite simple to understand why.
Imagine that you are temporarily living in the United States, like many international lottery winners from India. If you have bought a Powerball ticket with a jackpot of $100 million and won, you would receive much less than that. Prizes are normally reduced by 40% when you ask for a lump-sum payment, and that is only replicated by online lottery sites.
That same line of thought applies to SuperEnalotto. However, in that case, some lottery sites do not apply deductions. It is smarter to play on websites that offer a lower or no reduction at all instead of losing almost 20% of the prize according to the terms and conditions.
Applicable Examples of Lottery Tax in India
Multi-State American Lotteries (MUSL)
| Game | Powerball |
|---|---|
| Total Prize | $ 30,000,000 |
| MUSL Deduction | ( – 40.00%) |
| Prize Before Indian Taxes | $ 18,000,000 |
| Indian Income Tax on Lotteries | ( – 31.20%) |
| Prize After Indian Taxes | $ 12,384,000 |
For a MUSL jackpot of $30 million, you would receive $12.38 million after all of the applicable taxes on the lottery sites with the lowest fees or tax rates.
SuperEnalotto on theLotter
| Game | SuperEnalotto |
|---|---|
| Total Prize | € 30,000,000 |
| SuperEnalotto Deduction | ( – 20.00%) |
| Prize Before Indian Taxes | € 24,000,000 |
| Indian Income Tax on Lotteries | ( – 31.20%) |
| Prize After Indian Taxes | € 16,512,000 |
This is a very specific example that applies only to SuperEnalotto on theLotter.
Other Lottery Games
| Game | Euromillions |
|---|---|
| Prize Before Indian Taxes | € 30,000,000 |
| Indian Income Tax on Lotteries | ( – 31.20%) |
| Prize After Indian Taxes | € 20,640,000 |
In the case of lotteries that were not mentioned in any specific rule, the only tax that applies is the Indian income tax.
How to Avoid Lottery Tax in India?
You cannot avoid lottery taxes in India because you are obliged to pay 31.20% of anything you win above Rs 10,000, except for one strategy for low prizes.
Imagine that you have won around Rs 150,000 with your lottery tickets. If you withdraw it all at once, be prepared to receive only Rs 103,200. However, if you make several withdrawals of up to Rs 9,999, you have successfully avoided Indian lottery taxes.
The risk of that strategy is to forget to consider the terms and conditions of the chosen website that might limit the total withdrawals per day, week, or month. Keep that in mind and understand that you will probably be troubling yourself with small payments instead of a larger one at once.
Other than that, be true to your local legislation and never try to hide your winnings. The consequences are far worse than paying taxes.
FAQ
Any player who has won at least Rs 10,000 is obliged to declare that amount and pay the applicable tax.
