What are Section 194B & Section 194BB?
If you have income from winning a lottery, crossword puzzle, card game, gambling, betting, or horse race, TDS is deducted under Section 194B or 194BB if the income exceeds INR 10,000.
- Section 194B – Payer should deduct TDS at 30% on winnings from the lottery, crossword puzzles, card games, and other similar incomes
- Section 194BB – Payer should deduct TDS at 30% on horse race income
Incomes under Sec 194B & 194BB
Following are the types of payments as per Section 194B & Section 194BB:
- Winning from Lottery
- Crossword Puzzle
- Races including Horse Race
- Card Games
- Game Shows
- Any other income of similar nature
When & Who shall deduct TDS u/s 194B & 194BB?
TDS is required to be deducted at the time of payment of the prize. If the payer makes payment in installments, they must deduct TDS at the time of actual payment of each installment.
A person liable to distribute the prize for winning from lottery, crossword puzzle, card game, horse race, etc should deduct TDS from the payment and pay the balance amount to the winner. TDS should be deducted only if the winning amount exceeds INR 10,000.
The Deductor should deposit the TDS with the government and file a TDS Return on TRACES.
Rate of TDS u/s 194B & 194BB of Income Tax Act
The payer shall deduct tax at the rate of 30% under Sec 194B from the money paid for winnings from the lottery, crossword puzzles or card games, and other similar games if the amount exceeds INR 10,000.
The payer shall deduct tax at the rate of 30% under Section 194BB from the money paid for winnings from a horse race or income from wagering or betting in any racecourse if the amount exceeds INR 10,000.
Due Date to deposit TDS u/s 194B & 194BB
|Particulars||Time Limit to deposit TDS|
|If the amount is credited in the month of March||
|If the amount is credited in a month other than March||Within 7 days from the end of the month which deduction is made|
Deductor i.e. prize distributor shall issue a TDS Certificate to the deductee i.e. winner in Form 16A for TDS deducted on income from winning a lottery, crossword puzzle, card game, gambling, betting u/s 194B or income from horse race u/s 194BB.
The Deductor i.e. prize distributor is liable to deduct tax under section 194BB or Sec 194B of Income Tax Act. They shall file quarterly returns in Form 26Q within the following due dates:
|April to June||31st July|
|July to September||31st October|
|October to December||31st January|
|January to March||31st May|
Income on Dream 11 is a betting income. The income tax rate on such income is 31.2% (30% plus 4% cess). If your net winning from a contest exceeds INR 10,000, they would deduct TDS at 30% and credit the remaining amount to your account. You can then withdraw the funds without paying any additional tax.
The income tax on prize money from winning the lottery, puzzles, card games, etc is a flat rate of 30%. For any prize in kind such as a car, jewellery, holiday trip, etc you must calculate tax on the market value of the prize. Thus, the payer should deduct TDS at 30% of the aggregate amount of the prize in cash and the market value of the prize in kind.
The income tax rate on income from playing online games is a flat rate of 30%. If the winning amount exceeds INR 10,000, the poker platform would deduct TDS at 30%. They would deposit TDS with the government, file a TDS Return, and issue a TDS certificate to the winner. The taxpayer i.e. winner should file ITR, report such income as taxable income, and claim the TDS Credit. However, the taxpayer cannot claim any refund of the TDS deducted from such income.