Section 194B of Income Tax Act
Section 194B deals with TDS (Tax Deducted at Source) on money won through lotteries, game shows, puzzles, or betting.
It ensures that a part of the prize money is paid as tax to the government before you receive it.
What is Covered Under Section 194B?
TDS applies if you win:
- Lottery or lucky draw
- Crossword puzzle
- TV or online game shows (like KBC, IPL contests, etc.)
- Betting on horse races
- Gambling or card games
- Fantasy sports or online gaming
TDS Rate Under Section 194B
- Flat 30% TDS is deducted
- No basic exemption, no matter how small or big your other income is
- Plus surcharge and cess may also apply
When Does TDS Apply?
- If your winnings are more than ₹10,000, TDS must be deducted
- Applies to cash prizes, gift vouchers, and non-cash prizes like cars, bikes, phones, etc.
If prize is given in kind (like a car), the organizer must pay tax before handing over the prize.
Example 1 – Cash Prize
- You win ₹1,00,000 in an online quiz
- 30% TDS = ₹30,000
- You receive ₹70,000
- ₹30,000 is deposited to the government
Example 2 – Car as Prize
- Car worth ₹8 lakh won in a lucky draw
- You or the organizer must pay ₹2.4 lakh (30%) as TDS before taking the car
How to Claim the Prize and TDS Credit
- Winner gets Form 26AS showing TDS deducted
- At year-end, show this prize money in your Income Tax Return (ITR) under “Income from Other Sources”
- Adjust TDS already paid against your total tax liability
Important Notes
- Even if you don’t have a PAN, TDS will be higher at 30% or more
- You cannot claim deductions (like 80C) on this income
- Winnings must be declared in your tax return
