Understanding Tax Implication On Amount Won In Lottery or Gaming Event

Many a gaming event, horse racing, lotteries etc. provide you some income source which is taken to be 'income from other sources' as per the Indian tax laws. And even a small amount earned from such events arise tax implications for the winner irrespective of the tax slab of the individual concerned. This prize money also does not qualifies for any deduction or exemption.

Tax rate on amount earned as prize money from lotteries or gaming event

Tax @ 30% as per section 115BB of the Income-tax Act,1961 is charged on the entire amount with applicable surcharge and cess. While a uniform cess @ 3% applies for all income groups on tax and surcharge amount, surcharge of 10% and 15% on the tax amount becomes applicable in case the net taxable income of the assessee is over Rs. 50 lakhs or Rs. 1 crore respectively.

In case prize for the event is not as cash consideration then tax on such a prize is to be borne by the prize distributor depending on the market value of the prize.
TDS implication

Also, the payer of winning money needs to deduct TDS on the prize money in case it is over Rs. 10000 @ 30% without surcharge and cess in case the winner is Indian resident as per Indian tax laws and with cess and surcharge levies in case the winner is non-resident.

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