The rate of tax – Awards which are not approved by the
Government and prizes are taxed at the rate of 30%.
TDS incidence – If the amount of the award or the prize is more
than INR 10,000, TDS would have to be deducted from the
winnings before paying it to the winner according to the
provisions of Section 194B.
Income from Other Sources: Lottery winnings or game show
winnings are considered as “income from other sources” under
the Income Tax Act.
Taxable Amount: The entire amount won from a lottery or game
show is taxable. It is included in the individual’s total income for
the relevant financial year.
Tax Rate: Lottery or game show income is subject to income tax
at the applicable slab rate. The tax rates vary based on the
income slab the individual falls into, as per the prevailing
income tax rates for the relevant financial year.
TDS (Tax Deducted at Source): The payer or organizer of the
lottery or game show is responsible for deducting TDS at the
applicable rate before making the payment to the winner. They
are required to deduct tax on the winnings and issue a TDS
certificate to the winner.
In the case of winnings from horse races, TDS will be applicable
if the amount exceeds Rs 10,000.
TDS Rate: The TDS rate for lottery winnings is 30% u/s 194B
of the winning amount (plus applicable surcharge and cess).
For game show winnings, the TDS rate is also 30% (plus
surcharge and cess) unless the winner provides a valid
Permanent Account Number (PAN), in which case the TDS
rate is 31.2% (including surcharge and cess).
Reporting and Filing of Income Tax Return: If the total
income, including the lottery or game show winnings,
exceeds the taxable income threshold, the individual is
required to file an income tax return. The winnings should
be reported as “income from other sources” in the income
tax return.
Deductions and Exemptions: No specific deductions or
exemptions are allowed against lottery or game show
income. The entire amount is subject to tax at the
applicable rate.
Record-keeping: It is important to maintain proper
documentation and records of the lottery or game show
winnings, including the TDS certificate received from the
payer or organizer. These records should be retained for
reference during income tax assessments or inquiries.
