Lottery Ticket Commission TDS and Legacy Unit Repurchase Provision
This article explains the current TDS rule for commission, remuneration or prize connected with stocking, distributing, purchasing or selling lottery tickets, and preserves the historical Section 194F rule relating to specified repurchase of units by a Mutual Fund or the Unit Trust of India.
Section 393(3), Table Serial No. 4: lottery ticket commission
The current provision covers income credited or paid to a person who is or has been stocking, distributing, purchasing or selling lottery tickets. It includes income by way of commission, remuneration or prize, by whatever name called, on those tickets.
The payer is responsible for deducting tax where the statutory conditions and monetary threshold are satisfied. For current reporting, the relevant Section 393 table item should be used rather than old Section 194G.
When is tax deducted?
The withholding rule operates by reference to the statutory credit or payment event. A credit to a suspense account or another account may also be treated as credit to the payee where the deeming provision applies.
Current rate and threshold
The Income-tax Act, 2025 broadly retains the rates and monetary thresholds of the corresponding provisions of the 1961 Act at transition. The exact rate and threshold should be checked under Section 393 and the Finance Act applicable to the relevant tax year before deduction and reporting.
Transition from old Section 194G to Section 393
| Relevant event | Applicable law | Section reference |
|---|---|---|
| Payment or credit on or before 31 March 2026 | Income-tax Act, 1961 | Section 194G |
| Payment or credit on or after 1 April 2026 | Income-tax Act, 2025 | Section 393(3), Table Serial No. 4 |
| Current TDS reporting code | Income-tax Rules, 2026 | 1063 |
The Income Tax Department states that the applicable Act during transition depends on the relevant payment or credit event. For transactions governed by the 2025 Act, quoting the corresponding Section 393 table item avoids use of the repealed section number in current TDS reporting.
Legacy Section 194G: commission on sale of lottery tickets
The provision applied to a person responsible for paying income by way of commission, remuneration or prize, by whatever name called, to a person who was or had been stocking, distributing, purchasing or selling lottery tickets.
The uploaded historical text records a threshold of Rs. 15,000 and a TDS rate of 5 percent. These figures reflect an earlier version of Section 194G and should not be applied automatically to later periods without checking amendments effective for the relevant financial year.
Where income was credited to a suspense account or any other account in the payer's books, the legacy explanation deemed such credit to be credit to the payee for purposes of Section 194G.
Legacy Section 194F: repurchase of units
The uploaded provision stated that the person responsible for paying an amount referred to in Section 80CCB(2) had to deduct income-tax at the time of payment at 20 percent. Its relevance depends on the historical investment and statutory regime to which the payment relates.
Difference between Section 194F and Section 194G
| Point | Legacy Section 194F | Legacy Section 194G / current Section 393 |
|---|---|---|
| Subject | Specified repurchase of units linked to old Section 80CCB | Commission, remuneration or prize connected with lottery-ticket trade |
| Typical payee | Person receiving specified historical unit-repurchase amount | Person stocking, distributing, purchasing or selling lottery tickets |
| Current practical status | Historical / transitional relevance | Continuing TDS category under Section 393(3), Table Serial No. 4 |
Practical compliance checklist
Identify the nature of payment: distinguish lottery-ticket commission from lottery winnings and from historical unit-repurchase payments.
Determine the governing Act: establish whether the relevant payment or credit event falls before or after 1 April 2026.
Use the current section reference: for qualifying post-1 April 2026 lottery-ticket commission, quote Section 393(3), Table Serial No. 4.
Use the prescribed reporting code: the Income-tax Rules, 2026 identify code 1063 for lottery-ticket commission.
Verify the tax-year rate and threshold: consult the current Act, Finance Act and Rules before deduction.
Related Income Tax provisions
Lottery and horse-race winnings: Sections 194B and 194BB
Non-resident sports payments and National Savings Scheme: Sections 194E and 194EE
Commission, brokerage and immovable property TDS: Sections 194H and 194IA
Insurance commission and life-insurance policy payments: Sections 194D and 194DA
Historical rates and thresholds are period-specific. For current deductions, verify the applicable Section 393 table item and Finance Act.