Unable to complete your ITR filing?
Winnings from lotteries, game shows, card games, horse races, betting, gambling and online games are taxable in India. Such income must be reported separately in the Income-tax Return because it is generally taxable at a special rate rather than at the normal slab rates.
What is casual income?
“Casual income” is a commonly used filing description. It is not a separate head of income under the Income-tax Act. Lottery and game winnings are generally reported under the head Income from Other Sources.
Casual income may include winnings from:
- Lotteries and prize draws
- Crossword puzzles
- Television, electronic or game-show competitions
- Card games and games of any other sort
- Horse races
- Gambling and betting
- Fantasy sports, online games and gaming applications
- Cash or non-cash prizes received from such games or competitions
Do not classify every one-time receipt as casual income. Bank interest, gifts, cashback, compensation, freelance receipts and sale proceeds may have a different tax treatment and should be entered under their appropriate income category.
How are lottery and game winnings taxed?
1. Lottery, gameshow, card-game and betting winnings
Winnings from lotteries, crossword puzzles, races, card games, gambling, betting and similar games are taxable at 30% under section 115BB of the Income-tax Act, 1961.
Health and Education Cess at 4% and surcharge, wherever applicable, are added to the tax. Therefore, where surcharge is not applicable, the effective tax on the winnings is normally 31.2%.
2. Online-game winnings
Net winnings from online games are taxable at 30% under section 115BBJ. The taxable amount must be calculated according to the prescribed formula under Rule 133.
Deposits made by the player are not automatically treated as winnings. The gaming intermediary generally calculates net winnings after considering withdrawals, deposits, opening balances, closing balances and amounts already subjected to tax.
Important: Do not enter the total wallet balance or total withdrawals as online-game income without checking the net-winnings statement issued by the gaming platform.
Are expenses deductible from casual income?
No deduction is normally allowed for expenditure incurred to earn lottery, betting or game winnings. The following amounts cannot ordinarily be deducted from such winnings:
- Cost of a lottery ticket
- Entry or participation fees
- Commission paid to another person
- Travel or accommodation expenses
- Losses from other lotteries, games or betting activities
- Other expenses connected with earning the prize
Online-game winnings are separately calculated under Rule 133. A player should use the statutory net-winnings figure instead of manually reducing winnings by gaming losses or expenses.
TDS on lottery and game winnings
| Nature of income | Relevant section | TDS rule for FY 2025-26 |
|---|---|---|
| Lottery, crossword, card game, gambling or betting | Section 194B | TDS at 30% where winnings from a single transaction exceed ₹10,000 |
| Online games | Section 194BA | TDS at 30% on net winnings at withdrawal and at the end of the financial year; no minimum monetary threshold |
| Horse-race winnings | Section 194BB | TDS at 30% where winnings from a single transaction exceed ₹10,000 |
Where a prize is wholly or partly given in kind, or the cash portion is insufficient to cover the TDS, the person awarding the prize must ensure that the applicable tax has been paid before releasing it.
TDS is not necessarily the final tax. The winnings must still be reported in the ITR. Additional tax may become payable because of Health and Education Cess, surcharge or a mismatch in the TDS credit.
Example of tax on lottery winnings
Assume a resident taxpayer having salary income also wins a lottery prize of ₹1,00,000. The following calculation ignores surcharge:
| Lottery winnings | ₹1,00,000 |
| Income tax at 30% | ₹30,000 |
| Health and Education Cess at 4% | ₹1,200 |
| Tax on winnings | ₹31,200 |
If the lottery organiser deducted TDS of ₹30,000, an additional ₹1,200 may remain payable on this income because TDS for a resident generally does not include cess. The final amount will depend on the taxpayer’s complete return, surcharge applicability and available tax credits.
Which ITR form should be used?
- ITR-2: Generally applicable where the taxpayer has lottery or game winnings but does not have income from business or profession.
- ITR-3: Generally applicable where the taxpayer also has income from business or profession.
ITR-1 and ITR-4 are generally not suitable where the return contains lottery, betting or online-game income taxable at a special rate.
In the return, the income is reported in Schedule OS and is reflected in Schedule SI as income chargeable at a special rate. Online-game winnings are reported separately from lottery and other game winnings.
How to add casual income in myITreturn.com
Step 1: Log in to myITreturn.com
Log in to your myITreturn account and select the member for whom the return is being prepared.
Step 2: Open the Casual Income section
From the top menu, select Income and then click Other Income – Lottery/Online Gaming Income.
Step 3: Click “+ Add Casual Income”
Click the + ADD CASUAL INCOME button to create a new income entry.
Step 4: Enter the income details
Complete the fields displayed on the screen:
- Particulars: Select or enter the nature of the winnings, such as lottery winnings, online-game winnings, game-show prize or horse-race winnings.
- Description: Enter the name of the lottery organiser, gaming platform, event or payer.
- Date: Enter the date on which the prize or winnings became payable or were received.
- Amount: Enter the taxable amount before TDS. For online games, use the net-winnings amount calculated under the prescribed rules and supported by the gaming-platform statement.
After entering the details, click Save.
Step 5: Review the saved entry
The saved income will appear in the Casual Income list. Check the description, date and amount before proceeding with the return.
Step 6: Verify the TDS credit
Review the TDS details available in the Taxes Paid section of your return. The credit should be reconciled with:
- Form 16A issued by the payer or gaming intermediary
- Form 26AS
- Annual Information Statement
- Lottery or prize certificate
- Online-game wallet or net-winnings statement
Entering the income does not automatically guarantee that the corresponding TDS credit is available. The payer must have deposited and correctly reported the TDS against your PAN.
Before submitting the return, confirm that:
- The amount entered is before TDS, where applicable.
- Online-game income is based on statutory net winnings.
- The PAN appearing in the TDS certificate is correct.
- The TDS credit matches Form 26AS or AIS.
- Lottery and online-game income have not been combined incorrectly.
- The income is reflected under the special-rate schedule.
Income-tax Act, 1961 and Income-tax Act, 2025 mapping
Returns for FY 2025-26 or AY 2026-27 continue to be governed by the Income-tax Act, 1961. The Income-tax Act, 2025 applies from 1 April 2026 for Tax Year 2026-27 onwards.
| Subject | Income-tax Act, 1961 | Income-tax Act, 2025 | Nature of change |
|---|---|---|---|
| Income head | Section 56 | Section 92(2)(b) | Winnings continue to be taxed as Income from Other Sources |
| Lottery and other game winnings | Section 115BB | Section 194(1), applicable table entry | 30% special rate continues |
| Online-game winnings | Section 115BBJ | Section 194(1), applicable table entry | 30% tax on prescribed net winnings continues |
| Restriction on deductions | Section 58(4) | Section 94(4) | Restriction substantially continues |
| TDS provisions | Sections 194B, 194BA and 194BB | Section 393(3) | Consolidated and renumbered under the new Act |
Common mistakes to avoid
- Reporting only the amount received after TDS instead of the taxable amount.
- Reducing lottery-ticket cost or participation expenses from the winnings.
- Entering total online-game withdrawals instead of prescribed net winnings.
- Assuming that income is not taxable because the payer did not deduct TDS.
- Combining lottery winnings and online-game winnings in one incorrect category.
- Claiming TDS that is not appearing against the taxpayer’s PAN.
- Using ITR-1 or ITR-4 despite having special-rate winnings.
- Failing to report a prize received wholly or partly in kind.
Documents to keep
- Prize or winning confirmation issued by the organiser
- Form 16A or other TDS certificate
- Online-game net-winnings statement
- Wallet deposit and withdrawal records
- Bank statement showing receipt of the prize
- Form 26AS and AIS reconciliation
- Valuation and tax-payment evidence for prizes received in kind
Conclusion
Lottery, game-show, betting and online-game winnings must be reported even when tax has already been deducted. These incomes are generally taxable at a special rate of 30%, plus applicable cess and surcharge, and ordinary expenses cannot be deducted.
In myITreturn.com, add the income through Income > Other Income – Lottery/Online Gaming Income, enter the correct taxable amount and separately verify the related TDS credit before submitting the return.
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