The present article tries to explain the readers the provisions covered under section 194G of the Income Tax Act, 1961 relating to TDS on commission on purchase / distribution / sale and other activities of lottery tickets.

Basic provisions governing section 194G

Section 194G requires the person, who is paying any income by way of commission / remuneration / prize on lottery tickets to the person who has been stocking / distributing / purchasing / selling the lottery tickets, to deduct TDS.

Time of deduction of TDS

In case the Deductor is liable to deduct TDS as per provisions of section 194G of the Income Tax Act, 1961, then, the Deductor is required to deduct TDS within earlier of the following prescribed dates –

  • At the time of payment in cash / cheque / draft / any other mode; or
  • At the time of credit of income to the account of the payee.

Applicable TDS rates

The provision of section 194G requires the Deductor to deduct TDS @ 5%. It should be noted that no surcharge, education cess or SHE cess shall be levied on the said rate of 5%.

However, in case the PAN is not furnished, the Deductor is liable to deduct TDS @ 20% (maximum marginal rate).

Exemption limit under section 194G

The Deductor would be liable to deduct TDS under section 194G only if the income amount exceeds INR 15,000. In other words, the exemption limit specified under section 194G is INR 15,000 and TDS would be deductible only above that.

Provision of lower / NIL TDS deduction

The payee can, by filing an application in Form no. 13, request the assessing officer for lower TDS deduction or NIL / no TDS deduction. If the payee receives the appropriate certificate from the Assessing Officer, the Deductor would deduct TDS at a lower rate or NIL rate, as directed.

However, section 206AA(4) states that no certificate for lower / NIL deduction shall be granted unless the application contains the Permanent Account Number (PAN) of the applicant.

Also Read-

Particulars
TCS – Tax Collection at Source – A Complete Guide
TDS Rate Chart for Financial Year 2019-2020
Section 192 – TDS on Salary
Section 192A – TDS on Premature withdrawal from EPF
Section 193: TDS on Interest on Securities
Section 194 – TDS on dividend
Section 194A: TDS on interest other than interest on securities
Section 194B and Section 194BB – TDS
Section 194C – TDS on Contractors
Section 194D – TDS on insurance commission
Section 194DA – TDS in respect of Life Insurance Policy
Section 194E – TDS on payment to Non-resident Sportsmen or Sports Association
TDS under Section 194EE and Section 194F
Section 194H – TDS on Commission or Brokerage
Section 194I of Income Tax Act, 1961 – TDS on Rent
Section 194IA TDS on transfer of immovable property
Section 194IB – TDS on Rent paid by Individual / HUF
Section 194LA: Payment of Compensation on acquisition of certain immovable property
TDS under Section 194LB, 194LBA, 194LBB and 194LBC
Section 194LC: TDS on income by way of interest from an Indian Company or a business trust
Section 194LD TDS on income by way of interest on certain bonds and Government Securities
Section 194J TDS on Fees for Professional or Technical Services
Section 194N – TDS on Cash Withdrawals
Section 194M: TDS on Payment of certain sum by certain Individual / HUF
Section 195 TDS on payment of any other sum to a non-resident
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