Winning a lottery or a game show feels great. But the government takes a cut before you see the money. This article explains that cut in plain language. It covers the 30 percent TDS rule, the Rs 10,000 threshold, what changed in 2025 and 2026, and how to report the win in your tax return. One practical tip first: most state lotteries ask you to claim the prize within 30 days of the draw date. Missing that window can mean losing the prize.
Answer first: Section 194B makes the prize payer cut tax before paying lottery or game winnings. If one win is above Rs 10,000, the payer deducts 30 percent TDS on the full amount plus 4 percent cess, so the effective cut is 31.2 percent. From April 2026 this rule sits in Section 393(3) of the new Income-tax Act 2025.
What is Section 194B?
Section 194B is a TDS rule in the Income Tax Act 1961. It applies to winnings from lotteries, crossword puzzles, card games, other games of any sort, gambling, or betting.
The basic idea is simple. The payer does not hand over the full prize. The payer cuts tax first and pays you the balance.
From 1 April 2026, the Income-tax Act 2025 applies. The old Section 194B is now Section 393(3), Table Serial No. 1. The rate and the threshold stay the same. So if you read old articles about Section 194B, the same rule now lives at Section 393(3) in the new law.
Two nearby rules matter too. Online gaming winnings are not under this rule; they sit under old Section 194BA, now Section 393(3) Table Serial No. 2. Horse race winnings sit under old Section 194BB.
For a full picture of how lottery winnings are taxed end to end, read our guide on tax on lottery winnings in India.
What is the Section 194B TDS rate?
The TDS rate is a flat 30 percent. It does not depend on your total income slab. The Income Tax Department’s TDS rate chart for tax year 2026-27 lists the same 30 percent rate for Section 194B.
On top of the 30 percent, a 4 percent health and education cess is charged on the tax. So for winnings where your total income is up to Rs 50 lakh, the effective deduction is 31.2 percent.
If your total income exceeds Rs 50 lakh, a 10 percent surcharge applies. If it exceeds Rs 1 crore, the surcharge is 15 percent. The surcharge on lottery income is capped at 15 percent.
If you do not give your PAN, the rate stays at 30 percent. The normal no-PAN rate would be 20 percent, but the lottery rate is already higher, so 30 percent continues.
The winning itself is also taxed at a flat 30 percent under the special rate rule, old Section 115BB. This means no basic exemption limit applies. No slab benefit applies. You cannot claim deductions under Section 80C or 80D. You cannot claim the Section 87A rebate. You also cannot deduct expenses such as the ticket cost or travel cost.
What is the Rs 10,000 threshold under Section 194B?
TDS applies only when a single win exceeds Rs 10,000.
If the win is Rs 10,000 or less, no TDS is deducted. If the win is exactly Rs 10,000, still no TDS.
When the win is above Rs 10,000, TDS is calculated on the full winning amount. It is not calculated only on the part above Rs 10,000. So a Rs 10,001 win attracts 30 percent on the entire Rs 10,001, not just on Rs 1.
What changed in 2025 and 2026?
Two changes matter, and both are good news for small winners.
First, the threshold test changed. Till 31 March 2025, the Rs 10,000 limit was checked on the total winnings added up over the whole financial year. From 1 April 2025, the Finance Act 2025 changed it to a single-transaction test. Now each win is judged on its own. Three separate wins of Rs 9,000 each in one year no longer trigger TDS, because no single win crossed Rs 10,000.
Second, the section number changed. From 1 April 2026, the Income-tax Act 2025 replaced the 1961 Act. Old Section 194B became Section 393(3), Table Serial No. 1. Nothing else changed. The 30 percent rate, the Rs 10,000 single-win threshold, and the certificate and reporting rules all stay the same.
What stayed the same: the flat 30 percent rate, the rule that TDS is cut on the full amount once the threshold is crossed, and the rule that no deduction or rebate can be claimed against these winnings.
Is Section 194B TDS refundable?
Usually, no. If the TDS is correctly deducted at 30 percent, it is not refundable. That is because the 30 percent tax on such winnings is final.
You can claim back only excess TDS or wrongly deducted TDS. You claim that through your income tax return. For example, if TDS was cut on a Rs 9,000 prize by mistake, that deduction was wrong and you can claim it back.
If you want the full process for getting TDS money back, see our guide on how to claim a TDS refund online.
How do I report lottery winnings in my ITR?
Report the winnings under “Income from Other Sources” in your ITR. Most people use ITR-2 for this.
Report the gross winning amount, not the net amount you received after TDS. For example, if you won Rs 1,00,000 and TDS of Rs 31,200 was cut, you still report Rs 1,00,000 as income. The TDS appears separately as tax already paid.
The payer gives you a TDS certificate. Under the new regime this is Form 131; earlier it was Form 16A. Our guide explains the Form 131 TDS certificate due dates and download steps. The deducted TDS also shows in Form 26AS and in the AIS, so match the certificate with your 26AS before you file.
What is the difference between Section 194B and Section 194BA?
Section 194B covers offline winnings such as lotteries, crossword puzzles, card games, other games, gambling, and betting. It has a Rs 10,000 single-win threshold and TDS is on the full amount.
Old Section 194BA covers online gaming winnings. In the new Act it is Section 393(3) Table Serial No. 2. The rate is 30 percent on net winnings, and there is no threshold. Even a small online gaming win can attract TDS.
Horse race winnings are different again. Old Section 194BB applies, with 30 percent TDS and a Rs 10,000 threshold.
Note the related but separate rule for people who sell lottery tickets: commission paid to lottery agents is covered by Section 194G, not 194B. See our Section 194G guide.
Who is responsible for deducting TDS under Section 194B?
The payer is responsible. The payer can be the lottery organiser, the TV channel, or the game sponsor. They must deduct TDS before paying the prize.
After deducting, they give you the TDS certificate and the amount is reflected in your Form 26AS and AIS. You do not have to pay the TDS yourself at the time of winning; it is already cut from the prize.
If the prize is not cash, the rule still applies. For a car, a house, or any other prize in kind, the payer must make sure the tax is paid before handing over the prize. In practice the organiser either collects the tax amount from you first or pays it and recovers it from you.
Two worked examples
Example 1: Rs 1,00,000 lottery win
- Winning amount: Rs 1,00,000
- TDS at 30 percent: Rs 30,000
- Health and education cess at 4 percent of tax: 4 percent of Rs 30,000 = Rs 1,200
- Total deduction: Rs 30,000 + Rs 1,200 = Rs 31,200
- Amount you receive: Rs 1,00,000 − Rs 31,200 = Rs 68,800
Example 2: Rs 25,000 game-show win
- Winning amount: Rs 25,000
- TDS at 30 percent: Rs 7,500
- Cess at 4 percent of tax: 4 percent of Rs 7,500 = Rs 300
- Total deduction: Rs 7,500 + Rs 300 = Rs 7,800
- Amount you receive: Rs 25,000 − Rs 7,800 = Rs 17,200
What to do when you win
A win brings a few quick jobs. Do them in this order:
- Sign the back of the ticket at once and keep it safe. Note the draw date, because most state lotteries give you only 30 days to claim.
- Give your PAN to the payer so the TDS is recorded against you and shows in your Form 26AS.
- Collect the TDS certificate (Form 131, earlier Form 16A) from the payer and keep it with the ticket.
- Check Form 26AS and AIS on the e-filing portal to confirm the TDS amount matches the certificate.
- Report the gross winning amount under “Income from Other Sources” in your ITR, even if the TDS already covers the tax.
Quick comparison table
| Rule | What it covers | TDS rate | Threshold | Amount TDS is cut on |
|---|---|---|---|---|
| Old Section 194B; new Section 393(3), Table Serial No. 1 | Lottery, crossword puzzles, card games, other games, gambling, betting | 30 percent plus cess and applicable surcharge | Single win above Rs 10,000 | Full winning amount |
| Old Section 194BA; new Section 393(3), Table Serial No. 2 | Online gaming winnings | 30 percent | No threshold | Net winnings |
| Old Section 194BB | Horse race winnings | 30 percent | Rs 10,000 | Full winning amount |
FAQ
What is the TDS rate under Section 194B?
The TDS rate is a flat 30 percent. With 4 percent health and education cess, the effective rate is 31.2 percent where total income is up to Rs 50 lakh. If total income is above Rs 50 lakh, a 10 percent surcharge applies, and above Rs 1 crore it is 15 percent, capped at 15 percent on lottery income.
What is the threshold limit for TDS under Section 194B?
TDS applies only when a single win exceeds Rs 10,000. A win of Rs 10,000 or less does not attract TDS. Once the win crosses Rs 10,000, TDS is on the full amount.
Can I claim a refund of TDS deducted on lottery winnings?
Normally no. Correctly deducted TDS at 30 percent is final tax and is not refundable. You can claim back only excess or wrongly deducted TDS through your ITR.
Who is responsible for deducting TDS under Section 194B?
The payer is responsible. The lottery organiser, TV channel, or game sponsor must deduct TDS before paying the prize. You receive Form 131, earlier Form 16A, and the TDS shows in Form 26AS and AIS.
How do I report lottery winnings in my ITR?
Show the winnings under “Income from Other Sources,” usually in ITR-2. Report the gross amount, not the net amount received. The TDS already deducted will reflect through Form 26AS and AIS.
Does TDS apply if my winnings are exactly Rs 10,000?
No. The rule triggers only when a single win exceeds Rs 10,000. If the win is exactly Rs 10,000, or less, no TDS is deducted.
Official sources
- Income Tax e-Filing Portal — incometax.gov.in
- Income Tax Department — incometaxindia.gov.in
Reviewed by Asuthod Rathod, CA | Last updated: 13 November 2026
Disclaimer: This article is general information about Indian tax law and is not tax advice. Tax rules change often. Check the official e-filing portal or consult a qualified tax professional before acting on your specific case.
Editorial byline for eircicai income tax guides — covering the Income Tax Act, 2025, section renumbering, regime comparison, and deductions. Content is reviewed by Asuthod Rathod, CA.