Section 194B

Section 194B — the law in short

What the courts have decided on section 194B, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Pune Municipal Corporation v ACIT (TDS), Pune High CourtHelps taxpayerValidity unconfirmed
  I have been held an assessee in default under s.201 for not deducting s.194C and s.194LA tax when I issued TDR certificates instead of paying money. Is there an answer where the payment is wholly in kind?
  The Bombay High Court found a strong prima facie case and stayed the s.201 order, the demand and the s.271C penalty notice. Its prima facie view is that the words 'or by any other mode' in s.194C and in s.194LA must be read ejusdem generis with payment in cash or by cheque or draft, so those sections do not operate where the payment is made in kind by issuing transferable development rights. The court drew support for that reading from s.194B and s.194R, which do contain express machinery for a benefit paid wholly in kind and which is conspicuously absent from s.194C and s.194LA.
• ACIT v Om Prakash Gattani High CourtCuts both ways
  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?
  He may be right on the first and is wrong on the second. This is the foundational decision holding that s.205 bars any recovery from the deductee once tax has in fact been deducted, whether or not the deductor paid it over - the garnishee notices under s.226(3) were quashed - while at the same time holding that credit under s.199 is contingent on the tax being paid to the Central Government, so the Assessing Officer's note withholding credit until proof of payment was allowed to stand.
• Arakere Channappa Vishwanath v ITO ITATHelps taxpayerValidity unconfirmed
  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 waysValidity unconfirmed
  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.194G: commission on the sale of lottery tickets, and the rate and threshold as they now stand CBDT Circulars & InstructionsCuts both ways
  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.
• Statutory position — s.194BA: winnings from online games, net winnings, and where s.194B stops CBDT Circulars & InstructionsCuts both ways
  The gaming platform deducted tax on my gross winnings from each game. Should it have been deducting on net winnings under s.194BA instead, and from when?
  Section 194BA was inserted by the Finance Act, 2023 with effect from 1 April 2023 and, notwithstanding anything contained in any other provision of the Act, requires a person paying income by way of winnings from any online game during the financial year to deduct tax on the NET WINNINGS in the payee's user account, computed in the manner prescribed, at the end of the financial year at the rates in force. Where there is a withdrawal from the user account during the year, deduction is at the time of withdrawal on the net winnings comprised in that withdrawal, as well as on the remaining net winnings in the user account computed in the prescribed manner at the end of the year — and from the same date the second proviso to s.194B takes online-game winnings out of s.194B altogether.
• Notification 67/2022 — the 194S forms CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  I deducted 1% under s.194S on a peer-to-peer purchase. Which challan and which certificate, and by when?
  Form 26QE and Form 16E, on a thirty-day clock. A specified person deducting under s.194S pays the tax within thirty days from the end of the month of deduction, accompanied by a challan-cum-statement in Form 26QE filed electronically within the same thirty days, and issues the certificate in Form 16E to the payee within fifteen days of that due date. Form 26Q was substituted at the same time to carry ss.194R and 194S for deductors who are not specified persons.

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.