Under Section 194B of the Income Tax Act, 30 per cent tax is deducted on any prize money in excess of Rs 10,000 and other winnings from games, lotteries etc. This is deducted at source (TDS). A Three per cent education cess is payable on the tax amount.

While filing your income tax return you must include prize money under ‘income from other sources’ and, you must submit the TDS certificate as proof that you have paid all the tax due against the prize money.

Taxation on prizes in kind
A multitude of game/talent shows opt for a combination of cash and kind. The tax liability on cash prizes can be arrived at by a simple calculation, but this is not the case with prizes in kind. Although the applicable tax rate is the same, that is, 30 per cent, it poses a challenge on two fronts — who bears the tax liability and what is the valuation of the prize?

“If the prizes awarded are in kind, the prize distributor will, before releasing the prize, ensure that tax has been paid in respect of the winnings. It will either recover it from the winner or bear the tax liability itself and deposit TDS.

But if prizes are partly in cash and partly in kind, tax is deducted on the total value of the cash and kind from the cash. And, if the cash is insufficient to meet the TDS liability, either the winner or the prize distributor pays the deficit. This will depend entirely on the  terms and conditions of prize scheme.

Say, you win a car with a market value of Rs 7 lakh and the conditions require you to bear the tax liability. You will have to cough up Rs 2.1 lakh tax, and Rs 6,300 education cess. Then there are registration charges, road tax, octroi and insurance, which must be borne by the winner. The only alternative: Forego your award.

Guidelines for valuing prizes, including holidays, insurance products and even contracts awarded by channels to winners, are unclear. The valuation will be largely circumstantial. For instance, to value a holiday, you may have to consider how much it costs an unrelated third party.

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25 responses to “TDS under section 194B on winning from Lottery”

  1. Sumit Kumar says:

    Is this section applicable for bonus also ? which company usually gives once or twice in a year ??

  2. Jagdish Singh Rawat says:

    I paid TDS Rs 65400/-on lucky draw.I am salaried govt employee.while filing itr-1 can I show the amount in(income from other sources colmn).Kindly advice

  3. Amit arun halwai says:

    If i won 3 crore rupees jacpot in indian how many rupees tax will dedecut give me detail

  4. Ram says:

    I won an apple laptop worth rupees 2,00,000 in a contest conducted by eBay they asked me to pay 30 percent tax what will they do with this amount and can I pay after receiving the prize

    • kiran says:

      Guys be very careful when paying TAX to the prize distributor as we have so many fake things coming our way, YES 30% of the total winning money/prize has to be paid as tax without which the prize distributor will not surrender the prize to you it is as per the 194B act.
      I won a 1KG gold in a lucky draw and i have paid 30% tax amount (invoice amount) after which they gave the price.

  5. Satish says:

    If I receive 1.34 lac in lieu of surrender to trip to NASA won in education competition, what is TDS and income to be taxwd

  6. Jagdish singh rawat says:

    Recently i won a alto 800 in a luckydraw cost approx Rs 2,60,000.kindly tell how much tds i have to pay for this prize.

  7. Shri says:

    I won a prize for 10 lakhs in draw and I received the amount credited to my account on July 2016. I’ve read somewhere that I’ve to pay 30% tax for this while filing TDS in 2017. Am I right. Need your comments on this

  8. Tirthankar Bhattacharjee says:

    I was won the game show, and prize money is 89000/- and tds deducted from prize money 30% U/s 194B. I have no other income. Can I refund it when i am filling my income tax return

  9. Sameer says:

    Can I get refund if tds u/s 194b deducted
    If yes how??

    • LAW FIRM says:

      Yes, you can get refund of TDS deducted on prize money received by filling itr with department. For further assistance, call us at +91 9953318433.

    • LAW FIRM says:

      Yes, you can claim refund for this by filling itr.

      Further assistance, call us 9953318433.

  10. naidu says:

    in the last two months i have lost almost Rs.50000/- on rummycircle.com by playing games. but yesterday i won the game prize of Rs.16200/- but immediatly they were deducted Rs.4260/as tds. am i eligible to get back the tds because the net gain is not positive so far. please reply

    • Shekhar K says:

      No loss can be set off against income from winnings from lotteries, crossword

      puzzles, race including horse race, card game, and any other game of any sort or

      from gambling or betting of any form or nature

  11. bharath says:

    Why unclaimed casual winnings are treated as business income

  12. M.PRASADA RAO says:

    If a person win Rs. 5 lacs in lottery. He don’t have PAN No. then what would be the taxliability? it is for 30% or more.

    I am waiting for your advise.

  13. deepak says:

    TDS is deductable on winnings over 10000 …. there is no clerification whether it is during the year on transaction to transaction basis….plz clerify

  14. Pawan says:

    How much TDS + Cess + Surcharge will deduct from my account if i wins a lottery worth of 10 crore? thanks

  15. Mohit Chaturvedi says:

    If an insurance agent wins a prize from lic for his good performance and competence the is it covered in this section or not?

  16. Navin Chaudhry says:

    I have recently won a shop of Rs. 21 lacs from a radio station SMS contest. The builder is asking me to pay Income Tax upfront on account of 30% award money and service tax. The prize will be only given to me if I deposit the “income tax” to the builder, in the form of an Allotment Letter. The property has not yet been constructed and the basement construction has just begun. Through this promotion the builder has already created it’s brand value and booked the shops and other flats in other projects.
    I want to be guided on what is right process of claiming this prize and especially when I am unable to pay upfront Rs. 6.3lacs and service tax.
    Navin Chaudhry

  17. ishan says:

    If price in kind is worth of 300000/- and suppose I cant bear the tax liabilities or other formalities and I company suggest to sell the price in auction at 250000/- then at which value my TDS shoul be deducted either 300000/- or 250000/-?? Please give me answer I shall be grateful to u

  18. maheswar reddy says:

    As per the details provided in form 16 A, TAN of the deducter, and section under which TDS is deducted to be mentioned in ITR.
    Income from other sources will be 13k which is inclusive of TDS amount so deducted.

  19. Kaushal Prabhu Patil says:

    As per the details provided in form 16 A, TAN of the deducter, and section under which TDS is deducted to be mentioned in ITR.
    Income from other sources will be 13k which is inclusive of TDS amount so deducted.

  20. Sriram says:

    I won a TV worth 13K in a lottery and I paid the relevant tax which is around 4K to get it. This is something related to the example you mentioned in your post. I got the Form 16A as well. Do I need to fill all these details in my ITR1? What is the value I need to fill under “Income from other sources”

    Getting some confusing responses from my mates. Please share the exact info.

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