The lottery agent deducted tax on a five thousand rupee prize because my winnings for the year crossed ten thousand. Was he right, and does it depend on which year the prize was paid?
It depends entirely on the year. As s.194B stands from 1 April 2025, the threshold is ten thousand rupees in respect of a SINGLE TRANSACTION: the words 'or the aggregate of amounts' were substituted by 'in respect of a single transaction', and the words 'during the financial year' were omitted, both by Act No. 7 of 2025 with effect from 1 April 2025. Immediately before that the section worked on the amount or the aggregate of amounts exceeding ten thousand rupees during the financial year, so a payer had to add up a claimant's winnings across the year; and where the winning is wholly or partly in kind and the cash part is not enough to meet the tax, the payer must, before releasing the winnings, ensure that tax has been paid.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Income-tax Act, 1961, s.194B, as printed on the departmental page stamped Year 2026. It bears on section 194B, section 194BA, section 115BB, section 115BBJ, section 58(4), section 201, section 271C of the Income Tax Act 1961, in TDS Defaults and How Tax Law Is Read matters.
This is a small-money section that generates a great deal of avoidable default, and the threshold has moved four ways: one thousand rupees when the section came in through the Finance Act, 1972; five thousand rupees substituted for one thousand by the Finance Act, 1986 with effect from 1 June 1986; ten thousand rupees substituted for five thousand by the Finance Act, 2010 with effect from 1 July 2010; then an annual-aggregate ten thousand; and now a per-single-transaction ten thousand from 1 April 2025. The direction of travel is worth noticing, because the aggregate rule and the single-transaction rule pull opposite ways: under the aggregate rule a run of small prizes could cross the threshold and require deduction on every later payment, while under the current rule each transaction stands alone. Getting this wrong in either direction is expensive — deducting where you need not invites a refund claim you cannot fund, and not deducting where you must exposes the payer to s.201 and s.271C. Two further points. The second proviso now takes online games out of s.194B on and after 1 April 2023, so a platform paying online-game winnings deducts under s.194BA and not under this section, and 'online game' takes its meaning from clause (iii) of the Explanation to s.115BBJ. And the section says 'at the rates in force', so the actual rate comes from the Finance Act rate schedule and not from s.194B itself; the substantive charge on this class of income is s.115BB.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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The section as printed on the live page reads: the person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, being the amount in respect of a single transaction exceeding ten thousand rupees shall, at the time of payment thereof, deduct income-tax thereon at the rates in force. The first proviso: in a case where the winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings. The second proviso: nothing contained in this section shall apply to deduction of income-tax on winnings from any online game on or after the 1st day of April, 2023. The Explanation provides that 'online game' shall have the meaning assigned to it in clause (iii) of the Explanation to section 115BBJ. Footnote 30 on the same page records that 'in respect of a single transaction' was substituted for 'or the aggregate of amounts' by Act No. 7 of 2025 with effect from 1 April 2025, and footnote 31 that the words 'during the financial year' were omitted by the same Act from the same date.
As the section stands from 1 April 2025: the trigger is a single transaction exceeding ten thousand rupees, not an annual aggregate; deduction is at the time of payment, at the rates in force; the payer of a winning wholly or partly in kind must ensure tax has been paid before releasing it; and winnings from an online game paid on or after 1 April 2023 are outside the section altogether. Immediately before 1 April 2025 the trigger was the amount or the aggregate of amounts exceeding ten thousand rupees during the financial year. The ten thousand rupee figure itself replaced five thousand from 1 July 2010 (Finance Act, 2010), which had replaced one thousand from 1 June 1986 (Finance Act, 1986).
Not applicable — this is a statement of the statutory text as printed on the departmental section pages, with the amendment history taken from the footnote apparatus on those pages. No judicial reasoning is involved.
Provided that in a case where the winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings:
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Handle my notice → Ask a CA on WhatsAppIt depends entirely on the year. As s.194B stands from 1 April 2025, the threshold is ten thousand rupees in respect of a SINGLE TRANSACTION: the words 'or the aggregate of amounts' were substituted by 'in respect of a single transaction', and the words 'during the financial year' were omitted, both by Act No. 7 of 2025 with effect from 1 April 2025. Immediately before that the section worked on the amount or the aggregate of amounts exceeding ten thousand rupees during the financial year, so a payer had to add up a claimant's winnings across the year; and where the winning is wholly or partly in kind and the cash part is not enough to meet the tax, the payer must, before releasing the winnings, ensure that tax has been paid. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 194B, section 194BA, section 115BB, section 115BBJ, section 58(4), section 201, section 271C of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, s.194B, as printed on the departmental page stamped Year 2026. This is a small-money section that generates a great deal of avoidable default, and the threshold has moved four ways: one thousand rupees when the section came in through the Finance Act, 1972; five thousand rupees substituted for one thousand by the Finance Act, 1986 with effect from 1 June 1986; ten thousand rupees substituted for five thousand by the Finance Act, 2010 with effect from 1 July 2010; then an annual-aggregate ten thousand; and now a per-single-transaction ten thousand from 1 April 2025. The direction of travel is worth noticing, because the aggregate rule and the single-transaction rule pull opposite ways: under the aggregate rule a run of small prizes could cross the threshold and require deduction on every later payment, while under the current rule each transaction stands alone. Getting this wrong in either direction is expensive — deducting where you need not invites a refund claim you cannot fund, and not deducting where you must exposes the payer to s.201 and s.271C. Two further points. The second proviso now takes online games out of s.194B on and after 1 April 2023, so a platform paying online-game winnings deducts under s.194BA and not under this section, and 'online game' takes its meaning from clause (iii) of the Explanation to s.115BBJ. And the section says 'at the rates in force', so the actual rate comes from the Finance Act rate schedule and not from s.194B itself; the substantive charge on this class of income is s.115BB. If it applies to you, the first step is this: Fix the date of payment first, then apply the threshold rule for that year: per single transaction from 1 April 2025, annual aggregate before that, and check the ten thousand / five thousand / one thousand ladder for older years.
The section as printed on the live page reads: the person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, being the amount in respect of a single transaction exceeding ten thousand rupees shall, at the time of payment thereof, deduct income-tax thereon at the rates in force. The first proviso: in a case where the winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings. The second proviso: nothing contained in this section shall apply to deduction of income-tax on winnings from any online game on or after the 1st day of April, 2023. The Explanation provides that 'online game' shall have the meaning assigned to it in clause (iii) of the Explanation to section 115BBJ. Footnote 30 on the same page records that 'in respect of a single transaction' was substituted for 'or the aggregate of amounts' by Act No. 7 of 2025 with effect from 1 April 2025, and footnote 31 that the words 'during the financial year' were omitted by the same Act from the same date. The matter was decided on 2025-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. As the section stands from 1 April 2025: the trigger is a single transaction exceeding ten thousand rupees, not an annual aggregate; deduction is at the time of payment, at the rates in force; the payer of a winning wholly or partly in kind must ensure tax has been paid before releasing it; and winnings from an online game paid on or after 1 April 2023 are outside the section altogether. Immediately before 1 April 2025 the trigger was the amount or the aggregate of amounts exceeding ten thousand rupees during the financial year. The ten thousand rupee figure itself replaced five thousand from 1 July 2010 (Finance Act, 2010), which had replaced one thousand from 1 June 1986 (Finance Act, 1986).
Not applicable — this is a statement of the statutory text as printed on the departmental section pages, with the amendment history taken from the footnote apparatus on those pages. No judicial reasoning is involved. In the words reproduced by the source cited on this page: "Provided that in a case where the winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings:"
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Income-tax Act, 1961, s.194B, as printed on the departmental page stamped Year 2026. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 194B, section 194BA, section 115BB, section 115BBJ, section 58(4), section 201, section 271C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. As the section stands from 1 April 2025: the trigger is a single transaction exceeding ten thousand rupees, not an annual aggregate; deduction is at the time of payment, at the rates in force; the payer of a winning wholly or partly in kind must ensure tax has been paid before releasing it; and winnings from an online game paid on or after 1 April 2023 are outside the section altogether. Immediately before 1 April 2025 the trigger was the amount or the aggregate of amounts exceeding ten thousand rupees during the financial year. The ten thousand rupee figure itself replaced five thousand from 1 July 2010 (Finance Act, 2010), which had replaced one thousand from 1 June 1986 (Finance Act, 1986). It arises in TDS Defaults and How Tax Law Is Read matters, on section 194B, section 194BA, section 115BB, section 115BBJ, section 58(4), section 201, section 271C of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. For a payment on or after 1 April 2025, test each payment separately against ten thousand rupees; do not aggregate a claimant's winnings across the year. Where the prize is a car, a flat or any other winning in kind, do not release it until tax has been paid — the proviso puts the burden on the payer to ENSURE tax has been paid on the whole of the winnings, and a part-cash prize does not discharge it if the cash is insufficient. If the winnings are from an online game paid on or after 1 April 2023, stop using s.194B: the second proviso disapplies it and the deduction is under s.194BA on net winnings. Do not treat the section as reaching only lotteries and crosswords. The current words cover a card game and other game of any sort, and gambling or betting of any form or nature whatsoever — a scope the section acquired progressively, with 'card game and other game of any sort' inserted by the Finance Act, 2001 with effect from 1 June 2001. For the tax actually payable by the winner, look to s.115BB and to s.58(4), not to the withholding rate: s.194B fixes only the machinery.
Still good law. Stated from the departmental page stamped Year 2026, which is the latest vintage of s.194B I could retrieve. No second page of the same vintage exists to corroborate it word for word, so the current text rests on one page — although the in-kind proviso is corroborated against the Year 2010 and Year 2012 pages, which print it identically. No Finance Act text was read this pass and the Act numbers in the footnotes were not matched to Finance Act names from an independent source. Anything applying an annual-aggregate threshold to a payment made on or after 1 April 2025, or a five thousand rupee threshold to a payment on or after 1 July 2010, is superseded by amendment. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The current text was transcribed this pass from https://incometaxindia.gov.in/w/section-194b, headed 'Income-tax Act, 1961' and '194B - Winnings from lottery or crossword puzzle, etc', stamped Year: 2026, with footnote markers printed in the text and the footnotes reading '30. Sub. for "or the aggregate of amounts" by Act No. 7 of 2025, w.e.f. 1-4-2025.' and '31. Words "during the financial year" omtt. by Act No. 7 of 2025, w.e.f. 1-4-2025.' Those two footnotes are what establish the pre-2025 wording; the pre-2025 text itself was NOT read on a year-stamped page and is reconstructed from them. WHAT I COULD NOT ESTABLISH: I probed eighteen archived /w/section-194b-NN pages (suffixes 2, 4, 6, 8, 10, 12, 14, 16, 18, 20, 22, 24, 26, 28, 30, 32, 34, 36) and every one is stamped 1972 to 2012; none carries a Year stamp between 2013 and 2025, so I could NOT source the amending Act or the commencement date for the change from a per-payment ten thousand to an annual-aggregate ten thousand. Nothing above states that date, and a reader who needs it must find a 2023 or 2024 vintage page or the Finance Act, 2023 itself. The earlier ladder is fully sourced: /w/section-194b-4 (Year 2010) prints ten thousand rupees with footnote 38 'Substituted for "five thousand rupees" by the Finance Act, 2010, w.e.f. 1-7-2010. Earlier "five thousand rupees" were substituted for "one thousand rupees" by the Finance Act, 1986, w.e.f. 1-6-1986', and /w/section-194b-10 (Year 2012) prints the identical footnote as its footnote 49. The 'card game and other game of any sort' insertion by the Finance Act, 2001 w.e.f. 1-6-2001 is footnote 37 on the Year 2010 page and footnote 45 on the Year 2009 page (/w/section-194b-2). On s.115BB: the most recent year-stamped page I could retrieve is /w/section-115bb-12 (Year 2013), printing thirty per cent with footnote 19 'Substituted for "forty" by the Finance Act, 2001, w.e.f. 1-4-2002'. That is legislative history, not the current position — s.115BB's current text was NOT retrieved and no rate under it is stated in this entry. A verification pass probed three further suffixes and they too are old vintages — /w/section-194b-38 (Year: 1983), /w/section-194b-40 (Year: 1986) and /w/section-194b-42 (Year: 1989) — so the suffix number does not track vintage on this section in either direction, and the move from a per-payment to an annual-aggregate ten thousand rupee threshold still cannot be dated from any departmental page. Nothing above states that date. The decided_on field carries a commencement date and not a decision date: 1 April 2025, the date footnotes 30 and 31 give for the move to a per-single-transaction threshold. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
As the section stands from 1 April 2025: the trigger is a single transaction exceeding ten thousand rupees, not an annual aggregate; deduction is at the time of payment, at the rates in force; the payer of a winning wholly or partly in kind must ensure tax has been paid before releasing it; and winnings from an online game paid on or after 1 April 2023 are outside the section altogether. Immediately before 1 April 2025 the trigger was the amount or the aggregate of amounts exceeding ten thousand rupees during the financial year. The ten thousand rupee figure itself replaced five thousand from 1 July 2010 (Finance Act, 2010), which had replaced one thousand from 1 June 1986 (Finance Act, 1986).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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