TDS on Lottery, Puzzle, Game and Horse Race Winnings
Tax deduction at source on specified winnings is governed from 1 April 2026 by Section 393 of the Income-tax Act, 2025. The earlier Sections 194B and 194BB of the Income-tax Act, 1961 continue to matter for payments governed by the old Act.
Section 393: winnings from lotteries, puzzles, card games and other games
Section 393(3) contains TDS provisions applicable to specified payments to any person. Its table covers income by way of winnings from lotteries, puzzles, card games and other games of any sort, apart from online-game winnings which are separately identified.
TDS rate
For Tax Year 2026-27, winnings from lotteries, puzzles, card games and other games of the specified kind are subject to deduction at 30 percent where the statutory conditions for deduction are satisfied.
Winnings wholly or partly in kind
Where winnings are wholly in kind, or partly in cash and partly in kind and the cash component is insufficient to meet the tax liability, the person responsible for releasing the winnings must ensure compliance with the statutory tax-payment requirement before the winnings are released.
Section 393: winnings from horse races
The current provision also covers income by way of winnings from a horse race. The specified payer includes a bookmaker or a person licensed by the Government under the applicable law for horse racing at a race course or for arranging wagering or betting at a race course.
For Tax Year 2026-27, the applicable TDS rate on horse-race winnings under the relevant Section 393(3) table item is 30 percent, subject to the statutory threshold and other applicable provisions.
Online game winnings are separately covered
The Income-tax Act, 2025 separately identifies net winnings from online games in Section 393(3). Accordingly, an online-game payment should not be classified merely as an old Section 194B lottery or game transaction. The relevant current table item and rules for online-game winnings must be applied.
Legacy Section 194B: lottery and game winnings
The old provision also required the payer, where winnings were wholly in kind or where the cash component was insufficient to meet the TDS liability, to ensure that tax had been paid on the winnings before releasing them.
Legacy Section 194BB: horse-race winnings
Section 194BB applied to a bookmaker or a person holding the relevant Government licence for horse racing or arranging wagering or betting at a race course. Where the person was responsible for paying horse-race winnings exceeding the statutory threshold, tax had to be deducted at the time of payment at the rates in force.
Transition from Sections 194B and 194BB to Section 393
| Transaction period | Applicable provision | Compliance reference |
|---|---|---|
| Payment governed on or before 31 March 2026 | Income-tax Act, 1961 | Section 194B or Section 194BB, as applicable |
| Payment governed on or after 1 April 2026 | Income-tax Act, 2025 | Relevant item of Section 393(3) |
| Lottery, puzzle, card game or other specified game winnings | Section 393(3) | Use the current table item and applicable threshold and rate |
| Online-game winnings | Section 393(3) | Use the separate online-game table item |
| Horse-race winnings | Section 393(3) | Use the horse-race table item |
Income-tax return reporting
Winnings from lotteries, betting, gambling and race horses may require reporting under the appropriate return form and are not ordinary interest or salary income. The taxpayer should use the return form applicable to the person's status and sources of income for the relevant year.
Practical TDS checklist
Identify the nature of winnings: lottery, puzzle, card or other game, online game, or horse race.
Identify the applicable Act: determine whether the relevant transaction falls before or after 1 April 2026.
Check the threshold and rate: use the Section 393 table and applicable Finance Act for current transactions.
Winnings in kind: ensure the tax requirement is satisfied before releasing winnings where the cash component cannot cover the tax.
Use the correct TDS code: current TDS statements should quote the applicable Section 393 table item for transactions from 1 April 2026.
Related Income Tax provisions
Interest other than interest on securities: Section 194A
Payments to contractors: Section 194C
Insurance commission and life-insurance payments: Sections 194D and 194DA
PF accumulated balance and interest on securities: Sections 192A and 193
Always verify the applicable threshold, rate and table item for the tax year in which the TDS obligation arises.