The lottery distributor deducted ten per cent from my agency commission. What is the correct rate and threshold under s.194G, and when did they change?
Not ten per cent, unless the payment is an old one. On the departmental page stamped Year 2025 the rate is TWO per cent and the threshold is TWENTY THOUSAND rupees: footnote 85 records that 'two' was substituted for 'Five' by Act No. 15 of 2024 with effect from 1 October 2024, and footnote 84 that 'twenty' was substituted for 'fifteen' by Act No. 7 of 2025 with effect from 1 April 2025, the earlier 'fifteen' itself having been substituted for 'one' by Act No. 28 of 2016 with effect from 1 June 2016. The section reaches any person paying, to a person who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize by whatever name called on such tickets.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Income-tax Act, 1961, s.194G, as printed on the departmental page stamped Year 2025. It bears on section 194G, section 197, section 194B of the Income Tax Act 1961, in TDS Defaults and How Tax Law Is Read matters.
Every figure in this section has moved twice in under a decade and the ten per cent that most people still quote has been wrong since 1 June 2016. The full ladder is: ten per cent on commission exceeding one thousand rupees from insertion by the Finance (No. 2) Act, 1991 with effect from 1 October 1991; five per cent on commission exceeding fifteen thousand rupees from 1 June 2016; two per cent from 1 October 2024; and the threshold up to twenty thousand rupees from 1 April 2025. Two structural points besides. First, the section is drawn by reference to the PAYEE's activity — a person who is or has been stocking, distributing, purchasing or selling lottery tickets — not by reference to the payer, so it catches a distributor paying a sub-agent as readily as a State paying a distributor, and the words 'or has been' keep a former agent within it. Second, the lower-deduction machinery that used to sit inside the section is gone: sub-sections (2) and (3), which let the Assessing Officer give a certificate for a lower rate or no deduction, were omitted by the Finance Act, 2003 with effect from 1 June 2003, so relief now has to be sought under the general s.197 route and not under s.194G itself. The Explanation deems a credit to a suspense account or any similarly named account to be a credit to the payee's account, which closes the obvious avoidance route.
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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Sub-section (1) as printed on the Year 2025 page: any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize (by whatever name called) on such tickets in an amount exceeding twenty thousand rupees shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of two per cent. Sub-sections (2) and (3), which had allowed the Assessing Officer to certify a lower rate or no deduction on application, are printed as [***], having been omitted by the Finance Act, 2003 with effect from 1 June 2003. The Explanation: where any income is credited to any account, whether called 'Suspense Account' or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. The section was inserted by the Finance (No. 2) Act, 1991 with effect from 1 October 1991.
On the Year 2025 departmental page the rate is two per cent and the threshold twenty thousand rupees. The rate was ten per cent from insertion until it became five per cent by Act No. 28 of 2016 with effect from 1 June 2016, and two per cent by Act No. 15 of 2024 with effect from 1 October 2024. The threshold was one thousand rupees from insertion until it became fifteen thousand by Act No. 28 of 2016 with effect from 1 June 2016, and twenty thousand by Act No. 7 of 2025 with effect from 1 April 2025. Deduction is at credit or payment, whichever is earlier; a credit to a suspense account counts; and there is no lower-deduction certificate mechanism inside the section after 1 June 2003.
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.
Explanation.—For the purposes of this section, where any income is credited to any account, whether called "Suspense Account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.
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Handle my notice → Ask a CA on WhatsAppNot ten per cent, unless the payment is an old one. On the departmental page stamped Year 2025 the rate is TWO per cent and the threshold is TWENTY THOUSAND rupees: footnote 85 records that 'two' was substituted for 'Five' by Act No. 15 of 2024 with effect from 1 October 2024, and footnote 84 that 'twenty' was substituted for 'fifteen' by Act No. 7 of 2025 with effect from 1 April 2025, the earlier 'fifteen' itself having been substituted for 'one' by Act No. 28 of 2016 with effect from 1 June 2016. The section reaches any person paying, to a person who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize by whatever name called on such tickets. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 194G, section 197, section 194B of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, s.194G, as printed on the departmental page stamped Year 2025. Every figure in this section has moved twice in under a decade and the ten per cent that most people still quote has been wrong since 1 June 2016. The full ladder is: ten per cent on commission exceeding one thousand rupees from insertion by the Finance (No. 2) Act, 1991 with effect from 1 October 1991; five per cent on commission exceeding fifteen thousand rupees from 1 June 2016; two per cent from 1 October 2024; and the threshold up to twenty thousand rupees from 1 April 2025. Two structural points besides. First, the section is drawn by reference to the PAYEE's activity — a person who is or has been stocking, distributing, purchasing or selling lottery tickets — not by reference to the payer, so it catches a distributor paying a sub-agent as readily as a State paying a distributor, and the words 'or has been' keep a former agent within it. Second, the lower-deduction machinery that used to sit inside the section is gone: sub-sections (2) and (3), which let the Assessing Officer give a certificate for a lower rate or no deduction, were omitted by the Finance Act, 2003 with effect from 1 June 2003, so relief now has to be sought under the general s.197 route and not under s.194G itself. The Explanation deems a credit to a suspense account or any similarly named account to be a credit to the payee's account, which closes the obvious avoidance route. If it applies to you, the first step is this: Fix the date of credit or payment and read the rate and threshold off the ladder: ten per cent above one thousand rupees before 1 June 2016; five per cent above fifteen thousand rupees from 1 June 2016; two per cent from 1 October 2024; threshold twenty thousand rupees from 1 April 2025.
Sub-section (1) as printed on the Year 2025 page: any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize (by whatever name called) on such tickets in an amount exceeding twenty thousand rupees shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of two per cent. Sub-sections (2) and (3), which had allowed the Assessing Officer to certify a lower rate or no deduction on application, are printed as [***], having been omitted by the Finance Act, 2003 with effect from 1 June 2003. The Explanation: where any income is credited to any account, whether called 'Suspense Account' or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. The section was inserted by the Finance (No. 2) Act, 1991 with effect from 1 October 1991. 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. On the Year 2025 departmental page the rate is two per cent and the threshold twenty thousand rupees. The rate was ten per cent from insertion until it became five per cent by Act No. 28 of 2016 with effect from 1 June 2016, and two per cent by Act No. 15 of 2024 with effect from 1 October 2024. The threshold was one thousand rupees from insertion until it became fifteen thousand by Act No. 28 of 2016 with effect from 1 June 2016, and twenty thousand by Act No. 7 of 2025 with effect from 1 April 2025. Deduction is at credit or payment, whichever is earlier; a credit to a suspense account counts; and there is no lower-deduction certificate mechanism inside the section after 1 June 2003.
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: "Explanation.—For the purposes of this section, where any income is credited to any account, whether called "Suspense Account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly."
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Income-tax Act, 1961, s.194G, as printed on the departmental page stamped Year 2025. 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 194G, section 197, section 194B, 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. On the Year 2025 departmental page the rate is two per cent and the threshold twenty thousand rupees. The rate was ten per cent from insertion until it became five per cent by Act No. 28 of 2016 with effect from 1 June 2016, and two per cent by Act No. 15 of 2024 with effect from 1 October 2024. The threshold was one thousand rupees from insertion until it became fifteen thousand by Act No. 28 of 2016 with effect from 1 June 2016, and twenty thousand by Act No. 7 of 2025 with effect from 1 April 2025. Deduction is at credit or payment, whichever is earlier; a credit to a suspense account counts; and there is no lower-deduction certificate mechanism inside the section after 1 June 2003. It arises in TDS Defaults and How Tax Law Is Read matters, on section 194G, section 197, section 194B 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. Where a deductor has applied ten per cent to a recent payment, the excess is not lost — it is tax paid on the payee's behalf and is claimed back through the return; but take it up with the deductor first, because a corrected TDS return is cleaner than a refund claim. Test the payee against the statutory description rather than his job title: a person who is or HAS BEEN stocking, distributing, purchasing or selling lottery tickets. A former agent receiving trailing commission is within the section. Do not look for a lower-deduction certificate under this section — sub-sections (2) and (3) were omitted with effect from 1 June 2003 and the page now prints them as [***]. Use s.197 instead. Check suspense accounts. The Explanation deems a credit to a suspense account or any other name to be a credit to the payee's account, and the section then applies accordingly. Keep this section apart from s.194B: s.194G is the agent's commission on tickets, s.194B is the winner's prize.
Still good law. The 1 June 2016 changes are attributed to Act No. 28 of 2016 on two independent departmental pages, and the 1 October 2024 and 1 April 2025 changes are attributed on the Year 2025 page, whose 1 April 2025 attribution to Act No. 7 of 2025 matches the attribution of the same-dated changes on the s.194B, s.194BB and s.194LA live pages. The current text nonetheless rests on that single Year 2025 page; no Year 2026 vintage of s.194G was located, so a 2025-26 amendment would not have been visible. No Finance Act text was read this pass. Anything stating a ten per cent rate or a one thousand rupee threshold is superseded by amendment for any payment made on or after 1 June 2016, and anything stating five per cent is superseded for a payment made on or after 1 October 2024. 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-194g-34, headed 'Income-tax Act, 1961' and '194G — Commission, etc., on sale of lottery tickets', stamped Year: 2025, whose footnotes read '84. Sub. for "fifteen" by Act No. 7 of 2025, w.e.f. 1-4-2025. Earlier "fifteen" was Sub. for "one" by Act No. 28 of 2016, w.e.f. 1-6-2016.' and '85. Sub. for "Five" by Act No. 15 of 2024, w.e.f. 1-10-2024.' The 2016 step is independently corroborated by https://incometaxindia.gov.in/w/section-194g-26, stamped Year: 2017, whose footnotes 43 and 44 read 'Sub. for "one" by Act No. 28 of 2016 (w.e.f. 1-6-2016)' and 'Sub. for "ten" by the Act No. 28 of 2016 (w.e.f. 1-6-2016)' — so the reduction from ten per cent to five per cent and the increase from one thousand to fifteen thousand rupees are both attributed on two independent pages to the same Act on the same date. The five per cent / fifteen thousand text is further corroborated on /w/section-194g-28 (Year 2019 (No. 2)), /w/section-194g-30 (Year 2022) and /w/section-194g-32 (Year 2024 (No. 1)). The omission of sub-sections (2) and (3) is footnoted on /w/section-194g-6 (Year 2003, footnotes 39-40) and /w/section-194g-18 (Year 2007, footnote 40), both reading 'Omitted by the Finance Act, 2003, w.e.f. 1-6-2003'. WHAT I COULD NOT DO: the most recent vintage of s.194G I could retrieve is Year 2025, not Year 2026 — /w/section-194g-36 turned out to be Year 2019 (No. 1) — so the current text rests on one page and an amendment made after that page was stamped would not be visible to me. Also, note the footnote 85 printing on the Year 2025 page capitalises the substituted word as 'Five'; that is how the page prints it and it is reproduced here rather than silently corrected. A verification pass confirmed the pre-2016 end of the ladder independently: https://incometaxindia.gov.in/w/section-194g (the suffixless URL) is an ARCHIVED page stamped Year: 2000, printing ten per cent on commission exceeding one thousand rupees, with sub-sections (2) and (3) still in force and footnote 32 "Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991". It must never be used for the current position. The decided_on field carries a commencement date and not a decision date: 1 April 2025, the date footnote 84 gives for the twenty thousand rupee threshold, that being the most recent amendment printed on the page relied on. 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.
On the Year 2025 departmental page the rate is two per cent and the threshold twenty thousand rupees. The rate was ten per cent from insertion until it became five per cent by Act No. 28 of 2016 with effect from 1 June 2016, and two per cent by Act No. 15 of 2024 with effect from 1 October 2024. The threshold was one thousand rupees from insertion until it became fifteen thousand by Act No. 28 of 2016 with effect from 1 June 2016, and twenty thousand by Act No. 7 of 2025 with effect from 1 April 2025. Deduction is at credit or payment, whichever is earlier; a credit to a suspense account counts; and there is no lower-deduction certificate mechanism inside the section after 1 June 2003.
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