The Finance Minister Nirmala Sitharaman unveiled the Union Budget 2025 on February 1st, 2025, at 11:00 AM in Parliament, marking her 8th consecutive budget under the Modi Government 3.0. The budget introduced key changes to the tax system as part of a broader effort to simplify compliance, enhance revenue collection, and modernize regulations.
Among the key changes was a revision of the Tax Deducted at Source (TDS) rules related to winnings from lottery, crossword puzzles, and horse races.
The government has revoked the previous aggregate threshold of Rs 10,000 for deducting TDS on these winnings. Instead, TDS will now be applicable on any individual transaction that exceeds Rs 10,000, starting from April 1, 2025. Previously, the TDS threshold was calculated based on the total winnings accumulated throughout the financial year.
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For example, if someone earned Rs 8,000 from lottery winnings on three different occasions, the total of Rs 24,000 would have triggered TDS due to surpassing the Rs 10,000 threshold. Under the new rule, the threshold will be applied to each transaction separately, meaning TDS wouldn’t be deducted in such a scenario.
Section 194B of the Income Tax Act previously required TDS to be deducted if the total winnings from lottery, crossword puzzles, or similar games exceeded Rs 10,000 within a year. With the amendment, this aggregate limit is removed, and TDS will now be deducted on any single payment that surpasses Rs 10,000. This change simplifies the process by applying a per-transaction basis for TDS deductions.
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Similarly, Section 194BB, which governs TDS on horse racing winnings, will also follow the new approach. The previous rule that considered aggregate winnings exceeding Rs 10,000 in a year will be replaced with the single transaction threshold.
These changes will come into effect from April 1, 2025, marking a significant shift in the way TDS is applied to winnings from lottery, crossword puzzles, and horse races, ensuring that TDS will be deducted on individual large transactions rather than on cumulative yearly totals.
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