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. As the section now stands the rate is two per cent and the threshold 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 Section 194G of the Income-tax Act, 1961, as amended up to 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 it now stands: 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.
As the section now stands 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. As the section now stands the rate is two per cent and the threshold 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 Section 194G of the Income-tax Act, 1961, as amended up to 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 it now stands: 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. As the section now stands 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 Section 194G of the Income-tax Act, 1961, as amended up to 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. As the section now stands 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 section 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 published versions of the section, and the 1 October 2024 and 1 April 2025 changes are attributed on the most recent one, whose 1 April 2025 attribution to Act No. 7 of 2025 matches the attribution of the same-dated changes in sections 194B, 194BB and 194LA. The current text nonetheless rests on that single most recent version; no later one has been located, so an amendment after it would not be visible on this material, and no Finance Act text has been read. Two propositions follow and can be stated flatly. 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. Anything stating five per cent is superseded for a payment made on or after 1 October 2024, and anything stating a fifteen thousand rupee threshold is superseded for a payment made on or after 1 April 2025. What a practitioner has to do with that is fix the date of credit or payment first, because the figure changes four times across the life of the section and the section itself gives no transitional rule. Deduction is at credit or payment, whichever is earlier, and the Explanation deems a credit to a suspense account to be a credit to the payee, so the date is often earlier than the date money moves. Where the payee wants relief the application is under section 197, the machinery inside this section having been omitted with effect from 1 June 2003. 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 is taken from the Department's own published text of the Income-tax Act, 1961, under the heading '194G — Commission, etc., on sale of lottery tickets'. Its 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 on an earlier published version, whose footnotes 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 and the increase from one thousand to fifteen thousand rupees are both attributed, on two independent texts, to the same Act on the same date. The five per cent and fifteen thousand rupee text is carried by three further published versions between 2019 and 2024. The omission of sub-sections (2) and (3) is footnoted on two separate versions, both reading 'Omitted by the Finance Act, 2003, w.e.f. 1-6-2003'. The other end of the ladder is confirmed as well. The oldest published version of the section prints ten per cent on commission exceeding one thousand rupees, with sub-sections (2) and (3) still in force, and carries the footnote 'Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991'. That text is of course archived, and must never be used for the current position. Two limits. The most recent published version available is from 2025, so the current text rests on a single text and an amendment made after it would not be visible here. And footnote 85 capitalises the substituted word as 'Five'; that is how it is printed, and it is reproduced rather than silently corrected. 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 recorded on the text relied on. It is not a decision date; this is a statutory entry and there is no decision behind it. One thing this entry does not attempt. It states the section and its rate and threshold history; it does not state how the payee description has been construed in a contested case, what evidence establishes that a person has been stocking, distributing, purchasing or selling lottery tickets, or whether a State Government paying a distributor is a person responsible for paying within the section. No judicial treatment of section 194G has been examined here, and the silence should not be read as a finding that there is none. 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 now stands 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.
TaxSphere, “Statutory position — s.194G: commission on the sale of lottery tickets, and the rate and threshold as they now stand”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-194g-commission-on-sale-of-lottery-tickets-rate-and-threshold-history/ (validity last checked 2026-09-08)
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My money is stuck. Every invoice I raise has tax deducted at the full rate, my actual tax for the year is far less than the deductions, and I only get it back a year later when the refund comes. Somebody told me to apply for a lower-deduction certificate under section 197. What does section 197 actually say — which payments does it cover, what does the Assessing Officer have to be satisfied about, what form do I file, and can the certificate be backdated to cover the deductions already made?
The insurer deducted tax on my agency commission even though it was under twenty thousand rupees for the year. What is the s.194D threshold, and which year does my case fall in?
I pay my selling agents a percentage on every order they bring in, and I give my distributors a discount off the list price. Do I deduct under section 194H, at what rate, and from what figure does the obligation start?
The deductor deducted my tax and never deposited it. The Assessing Officer says he cannot give me credit until the money reaches the treasury, and has attached my bank account. Is he right on both counts?
