The provisions relating to TDS on commission, remuneration or prize on lottery tickets have been restructured under the Income-tax Act, 2025. The earlier Section 194G of the Income-tax Act, 1961 is now covered under Section 393(3) [Table: Sl. No. 4], effective from 1st April, 2026.
This restructuring retains the provisions relating to deduction of tax at source on income earned from activities such as stocking, distributing, purchasing or selling lottery tickets, while incorporating updated rates and threshold limits as per recent amendments.
Quick Reference – Section Mapping & Reporting
- New Section (IT Act 2025): Section 393(3)
- Table Reference: Table: Sl. No. 4
- Nature of Payment: Commission, remuneration or prize on lottery tickets
- Earlier Section (IT Act 1961): Section 194G
- Return Form: 26Q
- Code (for return filing): 1063
Applicability of TDS
TDS is required to be deducted on income earned by a person by way of commission, remuneration or prize (by whatever name called) in relation to activities such as stocking, distributing, purchasing or selling lottery tickets.
The responsibility to deduct tax lies with any person making such payment, and the provisions apply to the recipient earning income from lottery ticket-related activities, whether resident or non-resident (subject to applicable provisions).
Time of Deduction
TDS shall be deducted at the earlier of:
- At the time of credit of income
- At the time of payment
Rate of TDS
- 2% on such income
- 20% if PAN is not furnished, as per applicable provisions
Threshold Limit
TDS shall be deducted only when the prescribed limit is exceeded ₹20,000 in a financial year.
Lower or Nil Deduction of TDS
The assessee can make an application in Form No. 128 to the Assessing Officer and obtain from him such certificate as may be appropriate authorizing the payer to deduct TDS at nil rate or at lower rate.
Additional Applicability for Non-Residents (As per IT Act 2025)
- Nature of Payment: Any income, credited or paid to a person, who is or has been stocking, distributing, purchasing or selling lottery tickets, by way of commission, remuneration or prize (by whatever name called) on such tickets
- Previous Section (IT Act 1961): Section 194G
- New Section Reference: Section 393(3) [Table: Sl. No. 4]
- Rate: 2%
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