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The 2-Minute Summary
Win a lottery, a card game, a lucky draw, or any form of betting prize above Rs. 10,000 in a single transaction, and the organiser must deduct TDS before handing you the winnings. This is one of the clearest TDS provisions because it is transactional: each win is assessed independently. The threshold is Rs. 10,000 per single transaction, not per year. Every time you win above this amount, TDS applies on the full winning amount, not just the excess.
Example: Geeta wins Rs. 50,000 in a lucky draw contest. TDS at rates in force is deducted on the full Rs. 50,000 before the prize cheque is issued. She receives the net amount.
Example: Ramesh wins Rs. 8,000 in a scratch card game. Since Rs. 8,000 is below Rs. 10,000, no TDS is deducted. He receives Rs. 8,000 in full.
Under Income Tax Act 1961: Section 194B of the Income Tax Act 1961. Now Section 393(3) Sl. No. 1 under the 2025 Act. Threshold and scope unchanged.
At a Glance
| Item | Details |
| New Act Reference | Section 393(3), Sl. No. 1 of Income Tax Act 2025 |
| Old Act Reference | Section 194B of Income Tax Act 1961 |
| Who Deducts | Any person paying the winnings |
| TDS Rate | 30% |
| Threshold | Rs. 10,000 per single transaction |
| When to Deduct | At time of payment of winnings |
| Form for TDS Certificate | Form 16A |
What is Covered
Section 393(3) Sl. No. 1 covers winnings (other than online game winnings) from:
- Any lottery
- Crossword puzzles
- Card games and any other game of any sort
- Gambling or betting of any form or nature whatsoever
The phrase ‘any game of any sort’ and ‘any form of gambling or betting’ gives this provision an extremely wide reach. It covers game shows, television contests, sponsored competitions, and any organised wagering activity that is not an online game.
Online game winnings are covered under a separate provision, Section 393(3) Sl. No. 2 (old Section 194BA). The two provisions are distinct and should not be confused.
Threshold: Per Transaction, Not Per Year
The Rs. 10,000 threshold applies to each single transaction independently. This is different from most other TDS thresholds which are computed on annual aggregate amounts. If you win Rs. 9,000 in January and Rs. 9,000 in March from the same organiser, no TDS applies to either win because each individual transaction is below Rs. 10,000. There is no aggregation across transactions.
Example: A quiz competition organiser pays 12 participants Rs. 9,500 each as prizes. Since each individual prize is below Rs. 10,000, no TDS is deducted on any payment. If the prize had been Rs. 10,500 each, TDS would apply on the full amount for each participant.
Prizes in Kind: The Special Rule
When a prize is awarded in kind, such as a car, television, or holiday package, the organiser cannot deduct TDS directly from the prize because there is no cash component. The Act handles this as follows: Under Note 2 to Section 393(3), when winnings are wholly in kind, or partly in kind with the cash portion insufficient to cover the TDS, the person responsible for paying must ensure that tax has been paid before releasing the prize. In practice, this means the organiser either recovers the TDS amount from the winner before handing over the prize, or pays the TDS from their own funds and grosses up accordingly.
Example: A game show contestant wins a car worth Rs. 8 lakh. The organiser must ensure TDS is paid on Rs. 8 lakh before handing over the keys. If the contestant cannot arrange the TDS amount, the organiser may deduct it from any cash prize component or require the winner to pay before delivery.
Winnings Paid through Intermediaries
In lotteries sold through distributors and agents, the entity that actually pays the winning to the ticket holder is responsible for TDS. The lottery organiser, not the selling agent, typically deducts TDS on significant prizes.
Practical Compliance Checklist
- If you are a contest or lottery organiser: Deduct TDS on every prize above Rs. 10,000 per transaction. For prizes in kind, arrange TDS payment before releasing the prize.
- If you win a prize above Rs. 10,000: Expect TDS to be deducted. Obtain Form 16A from the organiser. Claim TDS credit in your ITR. Winnings are taxed at a flat 30% rate under Income from Other Sources.
- If you win a car, holiday, or other non-cash prize: Be prepared to pay the TDS amount or have it recovered from you before you receive the prize. The TDS is on the market value of the prize.
- If you win multiple small prizes below Rs. 10,000 each: Each win is assessed independently. No TDS applies as long as each individual transaction stays below Rs. 10,000.
Lottery and gambling winnings are taxed at a flat 30% rate regardless of your other income or slab. There is no deduction or exemption available. The TDS of 30% at source means most of the tax is collected before the money even reaches you.
