01 Feb TDS rules relaxed for lottery, these other incomes: Budget 2025
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Earlier the TDS threshold limit was checked in aggregate for a given financial year. Now it will be checked for a single transaction. For example: If earlier you had Rs 8,000, Rs 8,000, Rs 8,000 three lottery income then TDS would be deducted since the aggregate threshold was over Rs 10,000. Now the threshold is applicable for single transaction over Rs 10,000. So in this example now TDS will not be deducted.
Shrenik Gandhi, Managing Partner, Chambers of Shrenik Gandhi, says, “As per the existing provisions of Section 194B , TDS is applicable in case if the “amount or the aggregate of amounts” exceeds Rs. 10,000 during the financial year. Section 194B is being amended to delete the words “or the aggregate of amounts” and substitute with the words “in respect of a single transaction” and the words “during the financial year” would also be omitted. Thus, in the example if an individual won the lottery of Rs.8,000 – 3 times in a year, TDS would apply. However, with the proposed amendment, as the threshold limit of Rs.10,000 is to be considered for a single transaction, no TDS would apply even if the aggregate amount exceeds Rs.10,000.”
Neeraj Agarwala , Partner, Nangia & Co LLP, says, “Yes, under the proposed amendment, TDS under Section 194B and Section 194BB will apply only to prize money exceeding Rs 10,000 in a single transaction. This change simplifies compliance for prize distributors and provides relief to individuals with smaller winnings.”Agarwala says, “Under the existing provisions of Section 194B and Section 194BB, TDS is required to be deducted if the prize money from a single payer exceeds ₹10,000 in a single transaction or cumulatively during a financial year. Thus in your example, if you win Rs 8,000 three times in a year from the same distributor, TDS would apply because the total winnings of Rs 24,000 surpass the Rs 10,000 threshold. Of course, this would pose a challenge for prize distributors, as it made it difficult for them to anticipate the total prize winning by an individual during the financial year.”
Section 194BB – TDS on Winnings from horse race
The Explanatory memorandum to Budget 2025 said, “It is proposed to remove the condition of threshold applying on aggregate of amounts exceeding Rs 10,000 and to now instead apply in respect of a single transaction.”
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Section 194B of the Act requires that any person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, being the amount or the aggregate of amounts exceeding Rs 10,000 during the financial year shall, at the time of payment thereof, deduct income-tax thereon at the rates in force 2. It is proposed to remove the condition of threshold applying on aggregate of amounts exceeding Rs 10,000 and to now instead apply in respect of a single transaction. 3. This amendment will take effect from the 1st day of April 2025.
Section 194BB – TDS on Winnings from horse race
Section 194BB of the Act requires that any person, being a bookmaker or a person to whom a license has been granted by the Government under any law for the time being in force for horse racing in any race course or for arranging for wagering or betting in any race course, who is responsible for paying to any person any income by way of winnings from any horse race , being the amount or aggregate of amounts exceeding Rs 10,000 during the financial year, shall, at the time of payment thereof, deduct income-tax thereon at the rates in force.
It is proposed to remove the condition of threshold applying on aggregate of amounts exceeding Rs. 10,000 and to now instead apply in respect of a single transaction. This amendment will take effect from the 1st day of April 2025.