Section 115B and 115BB Income Tax: Life Insurance Business and Lottery, Race, Gambling and Betting Winnings

Sections 115B and 115BB of the Income-tax Act, 1961 prescribed special tax rates for profits of life insurance business and specified winnings. From 1 April 2026, the Income-tax Act, 2025 applies to Tax Year 2026-27 onward and these subjects are dealt with principally in Section 194.

Updated: 28 September 2026

Section 115B: tax on profits and gains of life insurance business

Under Section 115B of the Income-tax Act, 1961, where total income included profits and gains from life insurance business, tax on that component was calculated at 12.5%. Tax on the balance of total income was calculated as if the life insurance business profits had been excluded.

The old provision also contained a historical sub-section dealing with deposits into a social security fund for specified previous years relevant to assessment years beginning on 1 April 1989 and 1 April 1990. That historical mechanism should not be presented as a current compliance requirement.

Current law: Section 194 of the Income-tax Act, 2025

For Tax Year 2026-27 onward, Section 194 is the principal special-rate provision relevant to this page. For any person whose total income includes profits and gains from life insurance business, the table in Section 194 prescribes a tax rate of 12.5% on that income. The remaining total income is taxed separately in accordance with the applicable provisions.

Computation of profits from insurance business is governed by Section 55 read with Schedule XIV of the Income-tax Act, 2025. Part A of Schedule XIV deals specifically with life insurance business and provides for separate computation of those profits.

Section 115BB: tax on lottery, race, card game, gambling and betting winnings

Section 115BB of the Income-tax Act, 1961 applied where total income included winnings from a lottery, crossword puzzle, race including a horse race, card game or other game, or gambling or betting. The specified winnings were taxed at 30%, while the balance of total income was taxed separately.

The provision excluded income from the activity of owning and maintaining race horses from this special category. It also ceased to apply to winnings from online games for assessment years beginning on or after 1 April 2024, because online-game winnings were separately dealt with under Section 115BBJ.

Current treatment of winnings under the Income-tax Act, 2025

Section 194 of the 2025 Act taxes covered winnings, other than winnings from an online game, at 30%. The covered categories are lottery, crossword puzzle, race including horse race (other than income from owning and maintaining race horses), card game and other game of any sort, and gambling or betting of any form or nature.

Section 92(2)(b) includes such winnings within the head Income from other sources. Section 94(4) provides that, in computing these winnings, no deduction is allowed for expenditure or allowance connected with that income. The special rule does not apply in the same way to income of an assessee from the activity of owning and maintaining race horses.

Online games are separately identified

Online-game winnings should not be mixed with the ordinary Section 115BB category. Under the Income-tax Act, 2025, Section 194 separately lists net winnings from any online game at a 30% rate, with the net winnings computed in the prescribed manner.

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Official resources

For the current statutory text, use the Income Tax Department - Income-tax Act, 2025. Taxpayers can also use the Income Tax e-Filing portal for current forms, filing guidance and compliance services.

This article is a general legal and tax information resource. Rates may be subject to surcharge, cess and other provisions where applicable. The governing statute, Finance Act, rules, notifications and facts of the taxpayer should be checked for an actual computation.