As per the Indian Law, everything that comes under gambling – Lottery or Betting is taxable. The popular game shows, quiz shows, scratch cards, and online lotteries fall under the taxable section 56(2)(ib), Income Tax Act of 1961.
There are several avenues to earn money and it is important to understand the legalities involved in each one of them. There are shows/games that can earn you a huge sum of money running into crores! But, there’s always this one question lingering at the back of your head – what is the tax amount that you need to pay?
If you are wondering whether the scratch cards are taxable or not, then your answer is – yes they are taxable under the 56(2) section of the Income Tax Act of 1961. The 56(2) section clearly defines that “Income from other sources” are subject to taxation. Moreover, they are also subject to the Tax Deduction at Source (TDS), under section 194B and it is subject to a TDS of 30%. The total is 30.9% after considering the 2% education cess and the 1% higher secondary education cess. This amount further increases to 35.53% when the surcharge is added.
What Do You Need to Know?
You need to keep in mind the following points:
- Everybody, irrespective of age, income, and gender has to pay 30.9% tax.
- The TDS is also at 30.9% on the scratch-card winning.
- Your lottery income is considered different from regular money income.
- There is no relaxation or deduction on the scratch-card winning amount.
- You are free to invest or save that money as per the Section 80c and 80u of the Income Tax Act.
- The 30.9% of TDS must be paid to the government first prior to make claims for the prize.
What Are the State Laws on the Lottery?
This tax rate is standard across all states and union territories in India. As per the law, the organization, which conducts the lottery, is liable to deduct tax amount at the source. Since lotteries in India are in the state list, the jurisdiction rests upon the state government authority. This is the reason why there is a certain level of uncertainty on the legality of the lottery across states. It is legal in about 13 states in India and practiced widely.
What Are the Laws on International Lotteries and Scratch Card?
Indian citizens can win a big amount from international lotteries by playing lotteries on world-famous websites like Lottoland. The site is going to launch in India soon. However, they are not subject to ordinary Indian gambling laws. This means you can play international lotteries from any part of the country. And if you win a huge sum from the international scratch card lottery ticket, then you will have to pay 30% tax along with the surcharge. The surcharge rates applicable are 10% for less than INR 50 lakh and 15% for the amount up to 1 crore or more.
Lotteries are a game of luck and chance, where every person has an equal chance of winning. If you win the jackpot, you could get hundreds of crores in your bank account. So, even if you do pay tax, the amount that you are left with will be enough to keep you comfortable for the rest of your life. There is no restriction on the number of tickets you can buy to increase your chances of winning. Learn all about the games and be ready to test your luck when the Lottoland comes to India.