Section 115BB

Section 115BB — the law in short

What the courts have decided on section 115BB, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v Dr. M.A.M. Ramaswamy High CourtHelps department
  My betting income is being taxed at the special rate on the gross figure. I have a business loss the same year. Can I set the business loss off first and pay the special rate only on the net?
  No. The Madras High Court held that s.115BB is a standalone special provision and the entire winnings from betting are taxed at the special rate, without set-off of losses. The court also held that s.58(4) did not come into play at all, because the income being assessed was not income from the activity of owning and maintaining race horses — the activity that its proviso, and s.115BB itself, carve out.
• Arakere Channappa Vishwanath v ITO ITATHelps taxpayerNo later treatment found
  The Assessing Officer has taxed the gross winnings figure the online gaming platform reported for me, refusing to look at my buy-ins because s.58(4) allows no deduction. My buy-ins actually exceeded my winnings. Is that assessment sustainable?
  No. The Bangalore Bench held that s.58(4) operates only after there is income by way of winnings; it does not authorise the Department to treat gross wallet credits or recycled gaming funds as income in the first place. Since the very information obtained from the platform showed buy-ins of Rs 2,61,51,624 against gross winnings of Rs 2,33,52,271 — a net loss — there was no taxable income under s.115BB and the whole addition was deleted.
• Statutory position — s.194B: winnings from lottery, crossword puzzle, card games, gambling and betting, and the move to a per-transaction threshold CBDT Circulars & InstructionsCuts both ways
  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.
• Statutory position — s.194BB: winnings from a horse race, and who the deductor is CBDT Circulars & InstructionsCuts both ways
  I collected on a horse race and the club deducted tax. Who is obliged to deduct under s.194BB, and what is the threshold now?
  Section 194BB puts the duty on a defined class of payer only: a bookmaker, or a person to whom a licence has been granted by the Government under any law for the time being in force for horse racing in any race course or for arranging for wagering or betting in any race course. Such a person paying any income by way of winnings from any horse race must deduct at the rates in force where the amount, in respect of a single transaction, exceeds ten thousand rupees — that per-transaction wording having replaced 'or aggregate of amounts', and the words 'during the financial year' having been omitted, by Act No. 7 of 2025 with effect from 1 April 2025.
• Statutory position — s.194E with s.115BBA: withholding on payments to a non-resident sportsman, sports association or entertainer CBDT Circulars & InstructionsCuts both ways
  We are paying a foreign player, a foreign federation and a foreign performer for an event in India. Who is caught by s.194E, at what rate, and does the treaty stop the deduction?
  Section 194E as printed on the live departmental page requires the payer to deduct twenty per cent where any income referred to in s.115BBA is payable to a non-resident sportsman (including an athlete) who is not a citizen of India, to an entertainer who is not a citizen of India, or to a non-resident sports association or institution — at credit or payment, whichever is earlier. The section is entirely parasitic on s.115BBA: if the income is not income referred to in that section, there is no s.194E duty at all, which is how payments to umpires and match referees were held to fall outside it.
• Statutory position — s.58: what can never be deducted against income from other sources CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer has disallowed items in my other-sources computation without going near s.57(iii). What does s.58 actually shut out?
  Section 58 is headed 'Amounts not deductible' and opens with a non obstante clause overriding s.57. It bars personal expenses; expenditure of the nature referred to in s.40A(12); interest chargeable under the Act payable outside India on which tax has not been paid or deducted under Chapter XVII-B; and any payment chargeable under the head Salaries payable outside India unless tax has been paid or deducted. Sub-section (1A) carries s.40(a)(ia) and s.40(a)(iia) across, sub-section (2) carries the whole of s.40A across, sub-section (3) carries s.44D across for a foreign company, and sub-section (4) denies any deduction at all against winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.