Section 393 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 393(3) of the Income-tax Act, 2025 has a third Table, "For payments to any person", with seven serial numbers and three Notes. It covers winnings from lotteries, games, betting and horse races, winnings from online games, commission on lottery tickets, cash withdrawals from a bank or post office, an amount referred to in section 80CCA(2)(a) of the 1961 Act, and payments by a firm to its partners. This article reproduces each row, as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Winnings from lottery, games, betting (serial number 1) and horse races (serial number 3): rates in force, threshold Rs. 10,000 for a single transaction. Online game winnings (serial number 2): rates in force, tax on net winnings under Note 1. Lottery ticket commission (serial number 4): 2%, threshold Rs. 20,000. Cash withdrawals (serial number 5): 2%, threshold three crore rupees (co-operative society recipient) or one crore rupees (others). Serial number 6: 10%, threshold Rs. 2,500. Payments by a firm to a partner (serial number 7): 10%, threshold Rs. 20,000.
How section 393(3) works
Where an income or sum of the nature in column B is credited or paid by the person in column C during the tax year to any person, the person responsible for making payment shall deduct income-tax:
- (a) on the entire amount of the income or sum, where the amount or aggregate of amounts exceeds the threshold limit in column D, or on net winnings as per Note 1 of the Table;
- (b) at the rate in column D;
- (c) at the time of payment in cash, cheque, draft or any other mode, or as specified therein; and
- (d) subject to sub-sections (4), (5), (6), (8) and (9).
The overview of the section is in our post on section 393. The earlier Tables are in the articles on resident payments, serial numbers 1 to 3, interest and capital market income and payments to non-residents. Salary is in section 392. The earlier Act's provisions are mapped in our TDS sections mapping note (see our note on where the earlier Act's provisions sit in the 2025 Act). Section 393 was amended by section 84 of the Finance Act, 2026. Later amendments, rules and notifications should be checked.
For help with deducting tax on these payments, see our page on TDS compliance.
"Rates in force" is defined in section 2(90) and is the rate fixed by the annual Finance Act; it is not a figure and none is stated here.
The Table, serial numbers 1 to 7 (each cell as printed)
| Serial number | Nature of income or sum | Payer | Rate | Threshold limit |
|---|---|---|---|---|
| 1 | Any income by way of winnings (other than winnings from online games as referred to in serial number 2) from (a) any lottery; or (b) crossword puzzle; or (c) card game and other game of any sort; or (d) gambling or betting of any form or nature whatsoever | Any person | Rates in force | Rs. 10,000 in case of a single transaction |
| 2 | Any income by way of winnings from online game | Any person | Rates in force | As per Note 1 |
| 3 | Any income by way of winnings from any horse race | 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 | Rates in force | Rs. 10,000 in case of a single transaction |
| 4 | Any income, credited or paid to a person, who is or has been stocking, distributing, purchasing or selling lottery tickets, by way of commission, remuneration or prize (by whatever name called) on such tickets | Any person | 2% | Rs. 20,000 |
| 5 | Any sum, paid in cash, from one or more accounts maintained by any person (herein referred as recipient) | Any person, being (a) a banking company; (b) a co-operative society engaged in carrying on the business of banking; or (c) a post office | 2% | (a) three crore rupees in case of recipient being a co-operative society; or (b) one crore rupees in case of recipient being person other than a co-operative society |
| 6 | Any amount referred to in section 80CCA(2)(a) of the Income-tax Act, 1961 (43 of 1961) | Any person | 10% | Rs. 2,500 |
| 7 | Any sum in the nature of salary, remuneration, commission, bonus or interest paid to a partner of the firm or credited to his account (including capital account) | Any person, being a firm | 10% | Rs. 20,000 |
In the copy consulted the Table is cut by page breaks inside serial numbers 1 and 5, with the header repeated; the cells were rebuilt from the lines on either side. Serial number 6 names section 80CCA(2)(a) of the Income-tax Act, 1961 as printed; the reader should check that Act, and this article says nothing about it.
The Notes
Note 1 (serial number 2: online game). Tax shall be deducted:
- (a) on net winnings in the user account of the payee at the end of the tax year; and
- (b) where there is any withdrawal from the user account during the tax year, at the time of the withdrawal, on the net winnings comprised in the withdrawal as well as on the remaining amount of net winnings in the user account at the end of the tax year,
where the net winnings in each case is computed in such manner as may be prescribed. The method is left to the Income-tax Rules, 2026; see our rule-wise guides. The Table prints no money threshold for serial number 2.
Note 2 (serial numbers 1 and 2). Where the winnings or net winnings are (a) wholly in kind; or (b) partly in kind and partly in cash, but the cash part is not sufficient to meet the liability for deduction of tax on the whole, the person responsible for paying shall ensure that the tax required to be deducted has been paid before releasing the winnings.
Note 3 (serial number 4). The person responsible for making the payment shall deduct tax at the time of credit of the sum, or at the time of payment of the sum in cash or by issue of a cheque or a draft or by any other mode, whichever is earlier.
Definitions
- "Computer resource", "internet" and "online game" have the meanings in section 194(2) (section 402(8)).
- "Online gaming intermediary" means an intermediary who offers one or more online games (section 402(25)); "user" is any person who accesses or avails any computer resource of an online gaming intermediary (section 402(45)); "user account" is the account of a user registered with an online gaming intermediary (section 402(46)).
- "Banking company" means a banking company to which the Banking Regulation Act, 1949 applies (section 402(5)); check that Act if you need it.
Worked examples
Winnings, serial number 1. A lottery organiser (invented) pays a single prize of Rs. 50,000 to Mr. Joshi (invented). The threshold of Rs. 10,000 for a single transaction is exceeded, so tax is deducted on the entire Rs. 50,000 at the rate in force. A prize of Rs. 8,000 in one transaction is below the threshold and, on the face of the row, does not call for deduction.
Online game, serial number 2. Ms. Banerjee (invented) has a user account with an online gaming intermediary. During the tax year she withdraws Rs. 40,000 of net winnings and at year-end the account still holds net winnings of Rs. 30,000. Under Note 1(b) tax is deducted at the time of the withdrawal on the net winnings comprised in it (Rs. 40,000), and again at year-end on the remaining Rs. 30,000 (Note 1(a) and (b)), in each case at the rate in force. No rate figure is printed in the Table.
Lottery ticket commission, serial number 4. A lottery distributor (invented) is paid commission of Rs. 30,000 in the tax year. The threshold is Rs. 20,000, so tax = 2% of Rs. 30,000 = Rs. 600, deducted at the earlier of credit and payment (Note 3).
Cash withdrawals, serial number 5. A banking company (invented) pays out Rs. 1,50,00,000 in cash in the tax year from accounts maintained by Pinnacle Traders Private Limited (invented), a recipient that is not a co-operative society. The threshold for such a recipient is one crore rupees, which is exceeded. Section 393(3)(a) speaks of deduction on the entire amount where the amount or aggregate exceeds the threshold, so on the printed wording tax = 2% of Rs. 1,50,00,000 = Rs. 3,00,000. If the recipient were a co-operative society, the threshold would be three crore rupees and the same withdrawals would not exceed it.
Partner payments, serial number 7. Reliable & Co. (invented) is a firm. It credits Rs. 1,20,000 as interest on capital and remuneration to a partner's account in the tax year. The threshold is Rs. 20,000 and is exceeded: tax = 10% of Rs. 1,20,000 = Rs. 12,000.
Serial number 6. A payment of Rs. 5,000 of the kind referred to in the 1961 Act provision exceeds Rs. 2,500: tax = 10% of Rs. 5,000 = Rs. 500.
Need help with TDS on winnings, cash withdrawals or partner payments?
If you run a gaming platform, a bank branch, a post office or a firm, or you received such a payment and want to reconcile the tax deducted, our team can help you read the Table and Notes against your facts. Please contact us through the page for TDS compliance.
Key takeaways
- Winnings from lotteries, games, betting and horse races: rates in force, Rs. 10,000 for a single transaction.
- Online game winnings: tax on net winnings in the user account, at withdrawal and at year-end (Note 1); no money threshold is printed.
- Lottery ticket commission: 2%, Rs. 20,000.
- Cash withdrawals from a bank, co-operative bank or post office: 2%; three crore rupees for a co-operative society recipient and one crore rupees for others.
- Payments by a firm to a partner: 10%, Rs. 20,000.
Read next
- Section 393(4): cases where tax is not deducted at source
- Section 393(5) to (11): declaration and other rules
- Section 394: collection of tax at source
- Section 393: overview
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.