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The 2-Minute Summary
Separate from the TDS on lottery winnings (Sl. No. 1), there is a specific provision for TDS on the commission earned by people who stock, distribute, purchase, or sell lottery tickets. This covers the agents and distributors in the lottery supply chain, not the end winners. The rate is 2% and the threshold is Rs. 20,000 aggregate commission in a Tax Year from the same payer.
Example: A lottery distributor earns Rs. 30,000 in commission from a state lottery corporation for distributing tickets in Tax Year 2026-27. TDS at 2% = Rs. 600 is deducted before the commission is paid.
Under Income Tax Act 1961: Section 194G of the Income Tax Act 1961. Now Section 393(3) Sl. No. 4 under the 2025 Act. Rate and threshold unchanged.
At a Glance
| Item | Details |
| New Act Reference | Section 393(3), Sl. No. 4 of Income Tax Act 2025 |
| Old Act Reference | Section 194G of Income Tax Act 1961 |
| Who Deducts | Any person paying the commission |
| TDS Rate | 2% |
| Threshold | Rs. 20,000 aggregate per Tax Year |
| Covers | Commission, remuneration, or prize paid to lottery ticket stockists/distributors/sellers |
| Form for TDS Certificate | Form 16A |
Who is Covered
The provision specifically covers income credited or paid to a person who is, or has been, stocking, distributing, purchasing, or selling lottery tickets. This is the trade channel, not the end consumer buying a ticket. The payment can be called commission, remuneration, or prize. The label does not matter. Any income paid to these channel partners by way of their lottery distribution activity falls here.
Distinction from Lottery Winnings TDS
| Feature | Lottery Winnings (Sl. No. 1) | Lottery Ticket Commission (Sl. No. 4) |
| Who receives | End buyer who wins a prize | Stockist, distributor, or agent |
| Nature of income | Prize money won | Commission for selling/distributing |
| TDS rate | 30% | 2% |
| Threshold | Rs. 10,000 per transaction | Rs. 20,000 per year |
Practical Compliance Checklist
- If you are a lottery distributor or stockist: Track commission from each lottery organiser separately. TDS at 2% applies once annual commission from a single payer exceeds Rs. 20,000.
- If you receive commission from multiple lottery entities: Each payer applies the Rs. 20,000 threshold independently. All TDS appears in Form 26AS. Consolidate and claim all credits at filing.
- If your total income is low: Submit Form 15G to avoid TDS deduction if you expect no tax liability.
Lottery distribution is a regulated trade in many Indian states. The tax framework distinguishes between the distributor’s commercial income (commission) and the player’s windfall gain (prize). Each has its own TDS provision with different rates and thresholds.
