There is a special rate of 30% for winning from lotteries, crossword puzzles, races including horse races, card games and other games of any sort of gambling or betting of any form or nature under Income tax. Basic exemption is not allowed, also 80G cannot be claimed on this income.
S. 115BB, r/w s. 28(i) of the IT Act, 1961—Lottery Crossward, Puzzles, Horse races, etc., tax on—The assesee is a wholesale distributor of lotteries organised by the State of Kerala. As per distribution agreement, it is entitled to certain discount on the purchase of lottery tickets and if the tickets purchased by it are not fully sold out before the draw date then loss would be to the account of the assessee. However during assessment years, assessee won a prize on certain unsold ticket held by it and claimed that prize money recieved by it is not assessable as its buiness income. Under the special provision of s. 115BB, the wining amount of lottries are assessable irrespective as to under that head winning from lotteries fall and therefore, rate prescribed under s. 115BB is applicable for winning from lotteries received by the assessee irrespective of whether it is an income incidental to its business or not—CIT vs. Manjoo & Co. (2010)
S. 115BB, r/w s. 199 of the IT Act, 1961—Lottery, crossword Puzzles, horse races, etc., tax on—The Act provides a specific charging s. 115BB which provides tax at 30 per cent on income from lotteries. The income earned by the assessee in the form of prize money from lotteries is assessable under s. 115 BB of the Act even though the assessee has claimed that the lottery income is subjected to tax in Sikkim (residing in Sikkim), yet the same cannot be accepted because the authority to tax income under the constitution vests in the Central Government and the income earned in Sikkim has no exemption—M.K. Raghu vs. ACIT (2009)
S. 115BB r/w s. 56(2)(ib) of the IT Act, 1961—Business Income—The receipts from hedge betting i.e. business income is to be assessed in the same manner as in the case of other receipts from bets accepted by a bookmaker and it cannot be treated as winning from horse race taxable under s. 115 BB r/w s. 56(2)(ib) of the Act—ACIT vs. Reghunath B. Taware
Reference: – As Per Section 115BB of the Income Tax Act 1961
Tax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever under section 115BB:
Where the total income of an assessee includes any income by way of winnings from any lottery or crossword puzzle or race including horse race (not being income from the activity of owning and maintaining race horses) or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, the income-tax payable shall be the aggregate of—
(i) the amount of income-tax calculated on income by way of winnings from such lottery or crossword puzzle or race including horse race or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, at the rate of [thirty] per cent; and
(ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).
- —For the purposes of this section, “horse race” shall have the same meaning as in section 74A.