Circular No. 241

Section 194BB l Winnings from Horse Race

What this is

Circular No. 241 was issued by the Central Board of Direct Taxes on 1 June 1978. Its subject is Section 194BB l Winnings from Horse Race.

This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.

What it does

Sets up the machinery for the new deduction on horse race winnings from 1 June 1978. Section 194BB requires a book-maker, or a person licensed by Government for horse racing at a race course or for arranging wagering or betting there, to deduct tax when paying winnings from a horse race exceeding Rs. 2,500, at the rates in the Finance Act of the relevant year, and the obligation applies only to payments made after 31 May 1978. The Income-tax (Fifth Amendment) Rules, 1978 notified on 25 May 1978 amend rules 28, 30, 31 and 37: an application under section 197(1)(a) by a non-company recipient for a certificate to deduct at a lower rate or not at all is to be made in Form No. 13BB; the tax deducted is to be paid to the Central Government within one week from the date of deduction or of receipt of the challan; a certificate in Form No. 19BB is to be issued to the winner showing the winnings, the tax deducted and the other prescribed particulars; and a quarterly statement in Form No. 26BB is to be filed with the Income-tax Officer on 15 July, 15 October, 15 January and 15 April for the preceding quarter.

Why it was issued

Section 194BB was new, and the Board notified the consequential and ancillary rule amendments and forms needed to work it, explaining their main features.

Who it reaches

Book-makers and licensed race course operators
Winners of horse race prizes above the threshold
Non-company winners seeking a lower or nil deduction certificate under section 197
Income-tax Officers receiving the quarterly statements

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.194BB	s.393
s.197	s.395, s.400

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

SECTION 194BB l WINNINGS FROM HORSE RACE
1099. Rules and forms framed for the purposes of deduction of tax at source from winnings from horse race under the section from 1-6-1978
1. Under the new section 194BB, every person being a book-maker or a person to whom a licence has been granted by the Government under any law in force for horse racing in any race course or for arranging for wagering or betting in any race course, who is responsible for paying any income by way of winnings from any horse race in an amount exceeding Rs. 2,500 is required to deduct income-tax thereon at the rates prescribed in this behalf in the Finance Act of the relevant year. The obligation to deduct tax at source under this provision will apply only in relation to payments made after May 31, 1978.
2. The Board have notified the Income-tax (Fifth Amendment) Rules, 1978 on May 25, 1978, with a view to providing for certain consequential and ancillary matters. These rules seek to amend rules 28, 30, 31 and 37 and to prescribe certain forms for the purposes of this provision. The main features of the amendments to the Income-tax Rules are explained below :
1. Under section 197(1)(a ) in the case of any person other than a company, it will be open to the recipient of the winnings from horse race to make an application to the Income-tax Officer and obtain from him a certificate authorising the payer to deduct tax at such lower rate or deduct no tax, as may be appropriate in his case. The amendment to rule 28 seeks to provide that the application of this purpose is to be made in Form No. 13BB in the Rules.
2. The amendment to rule 30 seeks to provide that the tax deducted by the person responsible for paying the income by way of winnings from a horse race should be paid to the credit of the Central Government within one week from the date of such deduction or the date of receipt of the challan by the person making the deduction, as the case may be.
3. The amendment to rule 31 seeks to provide that the person responsible for making deduction of tax under section 194BB shall issue a certificate in the new Form No. 19BB to the person to whom winnings from horse race have been paid, showing therein the amount of income by way of winnings from horse race, the amount of tax deducted at source and other prescribed particulars.
4. The amendment to rule 37 seeks to provide that the person responsible for making the deduction of income-tax from the winnings from horse races shall also furnish to the Income-tax Officer having jurisdiction to assess him a quarterly statement in the new Form No. 26BB on July 15, October 15, January 15 and April 15, in respect of the deductions made during the immediately preceding quarter.

Circular : No. 241 [F. No. 142(4)/78-TPL], dated 1-6-1978.

What to watch

The deduction bites only on payments made after 31 May 1978; a win before that date does not attract it.
The lower or nil deduction certificate route under section 197(1)(a) is described as open to a person other than a company.
Payment of the deducted tax runs from the date of deduction, within a week, not from the end of the month.
The Rs. 2,500 threshold, the forms and the quarterly statement dates are as prescribed in 1978; the threshold and the whole certificate and statement machinery have been recast since, so use the form and limit in force for the year in issue.

Where you meet it

In a deduction default proceeding against a race club or book-maker, and in a winner's claim for credit for tax deducted on winnings.

What it names

Forms it names. Form No. 13BB, Form No. 19BB, Form No. 26BB

Rules it names. Rule 28, 30, 31, 37 of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 661 — Section 194B l Winnings from Lottery or Crossword Puzzle 16 September 1993
Circular No. 631 — Financial Year 1992-93 20 August 1992
Circular No. 616 — Financial Year 1991-92 22 November 1991
Circular No. 467 — Instructions for deduction of tax at source from winnings from lottery or crossword puzzle or horse race during financia 21 August 1986
Circular No. 425 — Financial Year 1985-86 24 July 1985
Circular No. 389 — Financial Year 1984-85 4 August 1984

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A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.