Section 194G of the Income-tax Act pertains to the deduction of TDS on income earned from lottery ticket sales. Since October 1, 1991, any person paying commission, remuneration, or prizes exceeding fifteen thousand rupees to distributors or sellers of lottery tickets is required to deduct income tax at a rate of 5% at the time of payment or credit, whichever is earlier. The Finance Bill 2024 proposes an amendment under Clause 56 to reduce this TDS rate from 5% to 2%. This change aims to come into effect from October 1, 2024, potentially easing the tax burden on stakeholders involved in lottery ticket distribution and sales. The amendment seeks to make compliance simpler while aligning with broader taxation reforms, reflecting adjustments in tax rates to promote business activities within the lottery sector. This adjustment is part of ongoing efforts to refine tax policies related to specific industries, ensuring they remain conducive to economic growth and compliance.
Budget 2024: Section 194G – Commission, etc on sale of lottery tickets
As per provisions of section 194G, any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize (by whatever name called) on such tickets in an amount exceeding fifteen thousand rupees shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of 5%.
2. It is proposed that TDS under section 194G of the Act be reduced from 5% to 2%.
3. The amendment will take effect from 1st day of October 2024.
[Clause 56]
Extract of Clause 56 of Finance Bill 2024
Clause 56 of the Bill seeks to amend section 194G of the Income-tax Act relating to commission etc. on sale of lottery tickets.
The said section provides that any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize (by whatever name called) on such tickets in an amount exceeding fifteen thousand rupees shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent.
It is proposed to amend the said section so as to reduce the said rate of tax deduction from five per cent. to two per cent.
This amendment will take effect from 1st October, 2024.
Proposed Amendment to section 194G of Income Tax Act, 1961 vide Finance Bill, 2024
In section 194G of the Income-tax Act, for the words “five per cent.”, the words “two per cent.” shall be substituted with effect from the 1st day of October, 2024.
