Income Tax Section 194BB


Section 194BB is a provision in the Income Tax Act that allows a deduction for any income earned from winning a horse race. The winner of a horse race, i.e. the jockeys, trainers, and owners, will receive monetary rewards. Before such winnings are distributed, tax will be deducted from the concerned person. In this article, we will go over Section 194BB of the Act, which deals with horse race winnings.

What is Section 194B of the Income Tax Act

Section 194BB was added following Section 194B. According to Section 194B, any person who receives an income from a lottery, crossword puzzle, card game, or other game for an amount greater than Rs.10000 must pay Income Tax, and TDS must be deducted before the payment is released from the concerned person. 

Section 194B provides that, in the case of winnings that are entirely in kind or partly in cash and partly in kind, if the winning portion in cash is insufficient to meet the liability of deduction of tax under this section in respect of the entire winnings, the person responsible for paying must ensure that tax has been paid to the Government before the amount of the winnings is released to the deductee.

Who must deduct TDS under Section 194BB:

Any person who is responsible for paying to another person any income from a horse race in excess of Rs.10,000 must deduct income tax at the current rates.

A bookmaker or a person to whom the government has granted a licence under any current law for horse racing in any race course or arranging for wagering or betting in any race course is referred to as “any person.”

TDS Rate for Horse Racing Winnings

TDS on horse race winnings is 30% plus surcharges under Section 194BB of the Income Tax Act of 1961.

At the time of payment, income tax will be deducted. The tax deduction will be made at the time of each installment if the price is paid in installments. For example, suppose Reena’s horse won a race and the bet amount was Rs.30000. 

Reena will be credited with an amount less than 30,000, as per Section 194BB. 30% of 30,000 will be deducted as tax, with the remainder credited to the individual’s account.

When TDS is to be deducted under Section 194BB:

        At the time such income is paid.

     If the winnings from a horse race do not exceed Rs.10,000, no tax is to be deducted at the source.

     Section 194BB makes no provision for deducting tax at a rate lower than the rate specified above.

Is it possible to receive the payment without or with a lower tax deduction under this section ?

Point to be noted that this is not possible

     Any person means a bookmaker or a person to whom the government has granted a licence for horse racing or arranging for wagering, betting on any race course.

     Income from races other than horse races, such as camel races, is not covered by this section.