Section 115BB: Tax on Lottery, Horse Race, Card Game and Betting Winnings

Section 115BB of the Income-tax Act, 1961 imposes a special 30% income-tax rate on specified winnings from lotteries, crossword puzzles, races, card games, gambling and betting. The rate applies to the specified winnings separately from the tax calculation on other income.

1. Scope and meaning of Section 115BB

The provision applies when an assessee's total income includes winnings from a lottery, crossword puzzle, race (including a horse race), card game, another game of any sort, or gambling or betting of any form or nature. It does not treat income from the business activity of owning and maintaining racehorses as horse-race winnings under this special-rate provision.

For this purpose, horse race carries the meaning assigned under Section 74A of the Income-tax Act, 1961. The expression online game is defined by Section 115BBJ as a game offered on the internet and accessible through a computer resource, including a telecommunications device.

2. Tax rates and treatment of winnings

Applicable surcharge and health and education cess are additional, where required. A taxpayer's ordinary slab exemption does not convert Section 115BB winnings into tax-free income. Tax is computed by adding the special-rate tax on winnings to the tax on the remaining total income.

Illustrative calculation

For qualifying lottery winnings of Rs. 1,00,000, the basic tax under Section 115BB is Rs. 30,000 (30%). If 4% health and education cess applies and no surcharge applies, the total is Rs. 31,200. Tax on any other income is calculated separately and added, subject to the applicable law.

3. Deductions, expenses and loss set-off

Section 58(4) of the Income-tax Act, 1961 generally prohibits deduction of expenditure or allowance connected with winnings taxable under Section 115BB. Chapter VI-A deductions cannot be used to reduce the amount of winnings chargeable at the special rate. The separate statutory provisions governing losses from specified activities, including Section 74A, must also be considered; losses should not automatically be set off against such winnings.

4. Tax deducted at source (TDS)

Under the 1961 Act, Section 194B governs TDS on lottery and similar winnings, while Section 194BB deals with winnings from horse races. Applicable monetary thresholds, timing, and rules for wholly or partly in-kind prizes must be checked for the relevant tax year. Tax deducted is generally credited against the recipient's final tax liability, subject to statutory conditions.

Online gaming is different: Section 194BA provides for deduction on net winnings at withdrawal or at the end of the financial year, as applicable. The special online-gaming regime should not be confused with the general prize-winning provisions.

5. Online games: Section 115BBJ

With effect from assessment year 2024-25, the proviso to Section 115BB excludes income by way of winnings from an online game. Such winnings are subject to Section 115BBJ, which taxes net winnings computed under the prescribed rules at 30%. The distinction matters because the online-game tax base and TDS timing differ from those for traditional lottery and betting winnings.

6. Income-tax Act, 2025: corresponding provision

The Income-tax Act, 2025 came into force on 1 April 2026. The official section-mapping navigator identifies Section 194 (Table, serial number 1) as the corresponding provision for the income covered by Section 115BB of the 1961 Act. Taxpayers should apply the enactment governing the relevant tax year and consult transitional and saving provisions when dealing with earlier assessment years.

See the Income Tax Department's section-mapping navigator and the official Income Tax Department portal.

7. Frequently asked questions

Is lottery income taxed at 30% even if my other income is low?

Yes. Qualifying lottery winnings are subject to the special 30% base rate under Section 115BB, with applicable cess and surcharge in addition.

Are winnings from online games covered by Section 115BB?

No, not from assessment year 2024-25 onward. Section 115BBJ separately taxes prescribed net winnings from online games at 30%.

Can I deduct the cost of lottery tickets or related expenses?

Expenses relating to Section 115BB winnings are generally not deductible because of the restrictions in Section 58(4).

8. Official legal references

• Section 115BB - Income Tax Department
• Section 115BBJ - Online games
• Income Tax Department guide to online-game winnings
• Official 1961-to-2025 section navigator

This article is general legal and tax information. The applicable statute, Finance Act amendments, tax year, surcharge, cess, and TDS requirements should be checked for individual transactions.