In India, lottery winnings are subject to taxation under the Income Tax Act, 1961. When an individual wins a lottery prize of 25 crore rupees or any amount, it is considered as income from other sources and is taxable.
The tax rate applicable on lottery winnings in India is 30% under Section 115BB of the Income Tax Act. This is a flat rate without any basic exemption limit. Additionally, a 4% health and education cess is applied on the tax amount, making the effective tax rate 31.2%.
For a 25 crore lottery win, the tax calculation would be: 30% of 25 crore = 7.5 crore rupees as basic tax, plus 4% cess of 7.5 crore = 30 lakh rupees, making the total tax liability approximately 7.8 crore rupees. The winner would receive about 17.2 crore rupees after tax deduction.
The lottery operator is required to deduct TDS （Tax Deducted at Source） at the time of prize payment if the winnings exceed 10,000 rupees. The winner receives Form 16A as proof of TDS deduction, which must be filed with their income tax return.
It\“s important to note that lottery winnings cannot be claimed as exempt under any section of the Income Tax Act, and no deductions or exemptions are allowed against this income. Proper documentation and timely tax filing are crucial for lottery winners in India. |
