Business of owning and maintaining race horses

Income earned from the activity of owning and maintaining race horses is treated differently from ordinary winnings from horse races under the Income-tax Act.

It is therefore important to distinguish between income earned by an owner from maintaining race horses and winnings received by a person from betting or wagering on horse races.

Owning race horses vs horse-race winnings

What is income from owning and maintaining race horses?

An owner of a race horse may receive stake money or prize money where the horse wins or secures a position in a horse race.

For the purpose of determining income or loss from this activity, expenditure incurred wholly and exclusively for maintaining the race horses may also be relevant, subject to the provisions of the Income-tax Act.

Such expenses may include expenditure relating to feeding, maintaining and training the horses, depending upon the facts and nature of the expenditure.

Carry forward and set-off of loss from maintaining race horses

Section 74A of the Income-tax Act, 1961 contains special provisions for losses arising from the activity of owning and maintaining race horses.

• A loss from owning and maintaining race horses can be set off only against income from the activity of owning and maintaining race horses.
• The loss cannot ordinarily be adjusted against salary income, house property income, capital gains, business income or other unrelated income.
• An eligible unabsorbed loss can be carried forward for a maximum of four assessment years immediately succeeding the assessment year for which the loss was first computed.
• The carried-forward loss can be adjusted against eligible income from owning and maintaining race horses in a subsequent year, subject to the applicable statutory conditions.
• Where the taxpayer wishes to carry forward the loss, the return must be filed within the applicable due date, subject to Sections 139(3) and 80 of the Income-tax Act, 1961.

How to Add Income from Owning and Maintaining Race Horses on myITreturn

If you have income from the activity of owning and maintaining race horses, you can enter the details while preparing your Income Tax Return on myITreturn.

Step 1: Go to the Income menu

After logging in to myITreturn and starting your return, click on Income from the top navigation menu.

Scroll through the available income categories and select Business of owning and maintaining race horses.

Step 2: Click on + ADD RECORD

The section for income from owning and maintaining race horses will open. Click on + ADD RECORD to enter the details.

If you have multiple relevant entries, additional records can be added wherever applicable.

Step 3: Enter the income details

Enter the required information in the fields displayed on the screen.

• Description: Enter a short description identifying the income or activity.
• Income: Enter the income earned from the activity of owning and maintaining race horses, such as applicable stake money or prize money.
• Expenses: Enter eligible expenditure incurred in connection with maintaining the race horses, such as expenditure relating to feeding, maintaining or training the horses, wherever allowable.
• Taxable Income: The resulting taxable amount will be displayed based on the information entered.

Step 4: Save the details

Verify the information entered and click on SAVE.

The details will then be considered while preparing your Income Tax Return on myITreturn.

Do not report ordinary horse-race winnings here

In simple terms:

• You own or maintain the race horse and receive eligible stake/prize money: Report it under the section relating to owning and maintaining race horses.
• You place a bet on a horse race and receive winnings: Report it under the applicable horse-race winnings category.

Which Income-tax Act applies for AY 2026-27?

For a return relating to FY 2025-26 / AY 2026-27, the relevant provisions of the Income-tax Act, 1961 continue to apply.

The Income-tax Act, 2025 came into force from 1 April 2026. The corresponding provisions under the new law should therefore be considered for the tax years governed by that Act, while earlier years continue to be dealt with in accordance with the applicable transitional and saving provisions.

Documents you should keep

Taxpayers should retain appropriate records supporting the income and expenditure reported in the return. Depending upon the circumstances, these may include:

• Details of race horses owned and maintained
• Evidence of stake money or prize money received
• Receipts and records for feeding and maintenance expenses
• Training-related expenditure records
• Bank statements supporting receipts and payments
• Any other documents supporting the income or expenditure claimed

Key points to remember

• Income from owning and maintaining race horses is different from winnings from betting on horse races.
• Special restrictions apply to the set-off of losses from this activity.
• Eligible losses may generally be carried forward for up to four assessment years, subject to statutory conditions.
• A timely return is important where the taxpayer intends to carry forward the loss.
• Income and eligible expenditure should be supported with appropriate records.

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