In India, lottery winnings are subject to taxation under the Income Tax Act, 1961. The tax treatment depends on whether the lottery is considered a game of chance or skill, but typically, lottery winnings are treated as income from other sources.
According to Section 194B of the Income Tax Act, any winnings from lotteries, crossword puzzles, card games, or other similar activities exceeding Rs. 10,000 are subject to Tax Deducted at Source （TDS） at a rate of 30%. This means that if you win more than Rs. 10,000 in a lottery, the payer will deduct 30% tax before giving you the prize money.
Additionally, lottery winnings are also included in your total income and taxed at the applicable slab rates. However, since TDS has already been deducted, you can claim credit for the TDS while filing your income tax return. It is important to note that no deductions or exemptions are allowed on lottery winnings, and the entire amount is taxable.
For example, if you win Rs. 1,00,000 in a lottery, the organizer will deduct Rs. 30,000 as TDS, and you will receive Rs. 70,000. You must still report the full Rs. 1,00,000 as income in your tax return, but you can adjust the TDS already paid.
State lotteries in India, such as those in Kerala, Punjab, and Goa, also follow these tax rules. It is advisable to keep proper records of your winnings and TDS certificates to ensure compliance with tax laws. |
