Section 194B: TDS on Winnings from Lottery or Crossword Puzzles

Have you ever wondered about people who win money on game shows like Kaun Banega Crorepati, Bigg Boss, Indian Idol etc pay tax or not? Do they take the whole money home?
The answer is NO. This is where the concept of TDS u/s 194B comes into play. Under this section, TDS is deducted on any income earned as winnings from lottery or crossword puzzle or card games or other ways like entertainment shows, game shows on TV etc.

Who is required to deduct TDS u/s 194B?

Every p comes under the income as referred above is required to release the income only after deducting tax.

What is the rate, time etc of TDS u/s 194B?

TDS under this section has to be deducted @ 30%, at the time when payment is made. If the amount of winning does not exceed ?10,000 during the FY then no tax u/s 194B shall be deducted.

Penalty & prosecution when failed to comply with provisions of Sec 194B

The person responsible for the tax deduction as discussed, if fails to deduct tax then as per section 271C, he needs to pay a penalty equal to the amount of tax deducted will be levied on him/her.
Secondly, as per section 276B, only deduction of such tax is not enough, It should be deposited with the government. Non-doing this can result into imprisonment of minimum 3 months up to 7 years fine can be imposed.
Important Point: Sometimes it may happen that the winning from such games is not given in cash but in kind like a car, mobile phone, foreign trip etc. In these cases, the value of the gift is taken as the relevant Market Value and gift shall be released only after TDS amount is taken from the payee (receiver).

Section 194BB: TDS on Winnings from Race Horses

The trend of organizing racehorses have seen a huge uproar in past few years. With so many people betting on their favorite “studs” to win money, the intervention of Income Tax Law has surely not been far behind. This brought into existence Section 194BB.

Who is required to deduct TDS u/s 194BB?

As per this section, a person

  • who is a bookmaker or
  • have a government license for organizing horse races, wagering or betting then such person will be responsible to deduct tax.
What is the rate, time etc of TDS u/s 194BB?

TDS Rate under section 194BB is also 30% and deduction is made at the time of payment. No tax deduction will be required if the winning amount is within Rs 10000.

Penalty & prosecution when failed to comply with provisions of Sec 194B

The penalty provisions are similar to section 194B.

CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.