Income Tax on lottery
Lottery games in India are conducted and monitored by the Government of the States under the guidance of the terms and conditions stipulated by the Central Government. Usually private lotteries are avoided and are restricted. There are several State Governments that conduct these lotteries, like the governments of Kerala, Goa, Sikkim etc. In Kerala, The state Government allows agents to register their outlets in all districts and people can purchase from those outlets or purchase the tickets online using credit card payment.
Income tax on Lottery winnings are specified under the Income Tax Act, 1961. It stipulates that an individual’s income tax on lottery winnings and other sources of income like crossword puzzles or races like horse racing that are of gambling or betting nature games will be taxed according to the following norms.
The tax payable should be calculated as the aggregate of the amount payable as income tax on lottery and all other income that are of gambling nature with a 30 percent tax rate, and the income tax amount that would be usually charged on the individual’s total income when it is reduced by the amount of income tax calculated on the income from the winnings.
The income Tax Act, 1961 mentions a few exemptions in Income tax in Chapter III. Some specific types of income can be exempted from tax, which implies that these sources of income need not be taken into account while calculating your tax from annual taxable income. In order to avail these exemptions, you need to document these incomes properly with the amount and source and show that these come under the list of exemptible income specified by the Income Tax Act, 1961. If these sources of income are not documented and submitted, then you will not be entitled to claim these tax exemptions. You should note that for any winnings Lottery or competitions, if the amount won exceeds rupees five thousand, then it is taxable and hence TDS will be deducted on the winnings as per Section 194B of the Income Tax Act, 1961.