Tax on Lottery & Gambling Winnings in India 2026-27

Updated: 3 June 2026 | Income-tax Act, 2025 | Section 115BB & 194B | Verified against CBDT notifications

Lottery, gambling, game show, crossword puzzle, and horse racing winnings in India are taxed at a flat 30% + 4% cess = 31.2% under Section 115BB of the Income-tax Act. No basic exemption, no 80C deduction, no slab benefit applies to such income. TDS of 30% is deducted at source on winnings above ₹10,000 under Section 194B. Online gaming is covered separately under Section 194BA from FY 2023-24.

31.2%

Effective tax on lottery / gambling: 30% tax + 4% cess — flat, no exemptions
TDS deducted at 30% by the payer on winnings above ₹10,000. No deductions allowed.

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No deductions, no losses, no carry-forward. You cannot deduct the cost of lottery tickets, gambling losses, or any expenses against winnings. Section 58(4) explicitly prohibits any deduction or set-off for lottery/gambling income. Even if you lose money on 100 tickets, you cannot offset it against the one prize you win.

Tax Rate & TDS by Type of Winning

Type of Winning	Tax Rate	TDS Section	TDS Threshold
Lottery (state/private)	30% + 4% cess	Sec 194B	Above ₹10,000 per prize
Crossword Puzzle	30% + 4% cess	Sec 194B	Above ₹10,000
Card Game / Game of any sort	30% + 4% cess	Sec 194B	Above ₹10,000
TV Game Show / Reality Show Prize	30% + 4% cess	Sec 194B	Above ₹10,000
Horse Racing Winnings	30% + 4% cess	Sec 194BB	Above ₹10,000 per race
Online Gaming (rummy, fantasy sports, etc.)	30% + 4% cess	Sec 194BA	No threshold — every net winning taxed
Betting / Gambling (offline)	30% + 4% cess	Sec 194B	Above ₹10,000

Example — Lottery Prize Calculation

Prize won: ₹5,00,000 in a State Government lottery

TDS deducted by lottery organiser (30%): ₹1,50,000

Amount received in hand: ₹3,50,000

Total tax due (31.2% of ₹5,00,000): ₹1,56,000

Balance payable at ITR filing (cess): ₹6,000

Assuming no surcharge (surcharge applies if total income exceeds ₹50 lakh).

TDS Sections — Detailed Rules

SECTION 194B

Lottery, Crossword, Card Games, Game Shows

TDS at 30% applies on winnings from lotteries, crossword puzzles, card games, or any other game or gambling/betting. Threshold: ₹10,000 per prize in a single transaction. If the prize is partly in kind (goods, car, etc.) and partly cash, TDS must be deducted from the cash portion, ensuring at least 30% of the total prize value is deducted. If there is no cash component, the winner must pay the tax before receiving the prize.

SECTION 194BA — NEW FY 2023-24

Online Gaming Platforms (Fantasy Sports, Rummy, Poker)

From 1 April 2023, Section 194BA introduced dedicated TDS rules for online gaming. TDS at 30% on net winnings per withdrawal. Additionally, at the end of the financial year (31 March), TDS must be deducted on the remaining net balance in the user's gaming wallet — even if not withdrawn. Net winnings = total withdrawal/year-end balance minus deposits made during the year. No threshold — every net winning attracts 30% TDS.

SECTION 194BB

Horse Racing Winnings

TDS at 30% on horse racing winnings above ₹10,000 per race/event. The race club or person responsible for paying the winnings deducts TDS. Same flat 30% tax (+ 4% cess) applies on the total winnings. Losses from unsuccessful bets on horses cannot be set off against winning bets.

Online Gaming — FY 2023-24 TDS Rule Change

Before FY 2023-24, online gaming platforms were treated under Section 194B (₹10,000 threshold per transaction). The Finance Act 2023 introduced Section 194BA specifically for online gaming, with significant changes:

Aspect	Before FY 2023-24	From FY 2023-24 (Sec 194BA)
TDS Section	194B	194BA
Threshold per transaction	₹10,000	No threshold — every net winning
Year-end TDS on wallet balance	Not required	Mandatory on net year-end balance
Net vs Gross winnings	On gross	On net (winnings minus deposits)
Tax rate	30%	30% (unchanged)

What Is NOT Allowed Against Lottery / Gambling Income

Deduction / Benefit	Allowed?
Basic exemption limit (₹3L / ₹4L)	NOT allowed
Section 80C (PPF, ELSS, LIC)	NOT allowed
Section 80D (health insurance)	NOT allowed
Cost of lottery tickets / gambling losses	NOT allowed (Sec 58(4))
Carry forward of gambling losses	NOT allowed
Set off against salary / business income	NOT allowed
Rebate u/s 87A (for income below ₹7L)	NOT allowed on lottery income

Frequently Asked Questions

What is the tax rate on lottery winnings in India?

Lottery winnings in India are taxed at a flat rate of 30% under Section 115BB of the Income-tax Act, 2025 (previously Section 115BB of the Income Tax Act, 1961). Adding the 4% health and education cess, the effective tax rate is 31.2%. This flat rate applies regardless of the winner's total income or tax slab — there is no benefit of the basic exemption limit (₹3 lakh or ₹4 lakh), no 80C deduction, and no slab-rate benefit. Even if your only income for the year is ₹15,000 from a lottery, you pay 31.2% on it.

Is TDS deducted on lottery winnings?

Yes. TDS (Tax Deducted at Source) is deducted at 30% on lottery winnings if the prize amount exceeds ₹10,000 under Section 194B. The lottery organiser deducts TDS before paying the prize. For example, if you win ₹50,000 in a lottery, the organiser deducts ₹15,000 (30% TDS) and pays ₹35,000. You must still file an ITR and pay the 4% cess on the gross winnings — your total tax is ₹15,600 (31.2% of ₹50,000). The ₹600 balance (4% cess) is payable at the time of ITR filing.

How is tax on online gaming different from lottery?

Online gaming is taxed at the same 30% flat rate, but under a separate section — Section 194BA (introduced from 01-Apr-2023 for TDS, effective from FY 2023-24). Key differences: (1) TDS under 194BA applies on net winnings — winnings minus wagering amount/deposit; (2) From FY 2023-24, online gaming platforms must deduct TDS on every withdrawal AND at the end of the financial year on the net balance in the gaming wallet; (3) There is no ₹10,000 threshold per transaction for online gaming TDS — TDS applies on every net winning. No deductions, losses, or carry-forward are allowed against gaming income.

Is there GST on lottery tickets?

Yes. GST is levied on lottery tickets separately from income tax. State government lotteries and authorised private lotteries are subject to GST. The GST rate on lotteries is 28% on face value (as applicable — GST Council has revised rates). This GST is embedded in the lottery ticket price and is not a cost borne directly by the winner. However, it reduces the effective prize pool available. GST and Income Tax are separate obligations — winning the lottery triggers both GST (on ticket) and income tax on the prize in the winner's hands.

Can lottery losses be set off against other income?

No. Section 58(4) of the Income-tax Act specifically prohibits deduction of any expenditure or loss incurred in relation to winnings from lottery, gambling, betting, card games, horse races, or any game of any sort. This means: (1) You cannot deduct the cost of lottery tickets against your winnings; (2) Losses from gambling or horse racing cannot be set off against salary or business income; (3) Lottery losses cannot be carried forward to the next year. The prohibition on deductions is absolute — no exceptions exist under the Income Tax Act for gambling-related losses.

Income from Other Sources TDS on Salary ITR Filing Due Date Income Tax Slabs 2026-27 Advance Tax Due Dates

Won a Prize? File Your ITR Correctly

Lottery and game show winnings must be reported in ITR under "Income from Other Sources". Our experts ensure correct reporting and check if any TDS credit is properly reflected in your Form 26AS.

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