A recent monumental lottery win by an Indian expat in the UAE has sparked widespread curiosity. The individual scooped up a staggering 100 million dirhams (approximately ₹240 crore), prompting immediate questions about the tax implications of such a windfall and the feasibility of transferring the winnings back to India.
The taxability of Anilkumar Bolla’s winnings hinges on his residency status. While the United Arab Emirates levies no local taxes on lottery prizes, meaning Bolla will receive the full amount in his UAE bank account, the situation in India differs significantly.
In India, lottery winnings are subject to a flat 30% tax. This is further amplified by a 15% surcharge on winnings exceeding ₹1 crore, along with a 4% Health and Education Cess calculated on the total tax amount. Crucially, these taxes apply if the individual holds resident status in India.
Determining Residency: Resident vs. NRI Status
India’s income tax laws define a resident individual based on their physical presence within the country. Generally, if an individual stays in India for 182 days or more in a financial year, or for 60 days or more in the financial year coupled with 365 days over the preceding four years, they are considered a resident. Those who do not meet these criteria are classified as Non-Resident Indians (NRIs).
As Anilkumar Bolla has reportedly been a resident of Abu Dhabi for over a year and a half, he is likely to be considered an NRI, potentially exempting him from Indian taxes on his winnings.
However, even if he were a resident, Indian tax laws stipulate that a resident’s total worldwide income is taxable in India, regardless of whether it is received or remitted into the country.
The Rules on Bringing Winnings to India
Regardless of tax status, the Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA) strictly prohibit the remittance of lottery winnings into India. Therefore, even with the exemption from Indian taxes, Bolla cannot legally bring his lottery prize money into the country.
Here’s a concise summary:
- UAE Taxes: Lottery winnings are tax-free in the UAE.
- Indian Taxes: Indian tax applies if the winner is considered a tax resident in India, based on their stay duration. NRIs are generally exempt.
- Remittance: Lottery winnings cannot be transferred to India under current foreign exchange regulations.
Understanding the UAE Lottery System
The UAE Lottery’s record-breaking Dh 100 million jackpot operates under the ‘Lucky Day Draw’. This digital raffle involves purchasing a Dh100 ticket, which provides a unique multi-digit number. A winning number is drawn, and the ticket matching the exact sequence wins the grand prize.
Bolla’s winning ticket matched the seven-digit sequence 251018 in the draw held on October 18, defying odds of approximately 1 in 8.8 million.
Upon his win, Bolla expressed his immediate plans: “I plan to buy a supercar first and treat myself to a month-long stay at a seven-star hotel.” He also aims to bring his parents to the UAE, marking a heartwarming long-term aspiration.