Section 194BB of the Income-tax Act requires that tax be deducted at source on winnings from horse races exceeding Rs. 10,000 in total during a financial year. The proposed amendment, as outlined in the Finance Bill 2025, seeks to change this to apply tax deduction only when a single transaction exceeds Rs. 10,000, removing the condition of the aggregate threshold. The revised provision is designed to streamline the tax deduction process for winnings from horse racing and wagering activities. This change is set to take effect from April 1, 2025, and will impact the way tax is deducted on such winnings in the future.
Budget 2025: Section 194BB – 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.
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.
[Clause 55]
Extract of Relevant Clauses of Finance Bill, 2025
Clause 55 of the Bill seeks to amend section 194BB of the Income-tax Act relating to winnings from horse race.
The said section provides that any person, being a bookmaker or a person to whom a licence 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 ten thousand rupees during the financial year, shall, at the time of payment thereof, deduct income-tax thereon at the rates in force.
It is proposed to amend the said section so as to provide that tax will be required to be deducted at source under this section when the amount exceeds ten thousand rupees in respect of a single transaction.
This amendment will take effect from 1st April, 2025.
Extract of Relevant Amendment Proposed by Finance Bill, 2025
55. Amendment of section 194BB.
In section 194BB of the Income-tax Act,
(a) for the words “or aggregate of amounts”, the words “in respect of a single transaction” shall be substituted;
(b) the words “during the financial year” shall be omitted.
