By the expansion of the scope technology in varied arenas including gaming, the availability of the games has increased on the virtual space as well. In absence of appropriate regulations, online gaming in many States is being controlled by the available respective gaming/ gambling legislations.
Therefore, as of now the subject of gaming in India is governed by the respective state governments as per the respective state legislations enacted by them.
While some States have specifically laid down or are in the process of laying down clear, unambiguous legislations regarding the playing of online games within their premises, some others have explicitly prohibited betting in any form within their boundaries
In India, online gaming is not prohibited. Online gaming with stakes or real money is allowed in most of the states of India. Therefore, unless specifically prohibited by the state government, it is not prohibited.
Online games with stakes/ real money cannot be played in whole of India as the laws of the states of Assam, Odisha and southern State of Telangana specifically prohibit online games with stakes in India.
Subject to the state laws of the location of the business offering online games with stakes, specific license/ permission may be required.
With regards to taxation on the earnings from the gaming activities, in cases where the winnings/ Prize money by way of gaming activities exceeds the amount of INR 10,000, the TDS provisions are applicable at the rate of 30% without cess.
Indian Judiciary on Online Gaming
Although the courts have observed that the skill based games are exempted from the purview of gambling, the District Court of Delhi opined that when skill based games are played for money in virtual space, the same would be illegal and observed that the degree of skill in games played in a physical form cannot be equated with those played online as the degree of chance substantially increases because various manipulations including the randomness, inside cheating, collusion cannot be ruled out, when the same games are played in the virtual space. 
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