TDS 194G

A summary of Section 194G

Section 194G- Introduction

Section 194G of the Income Tax Act of 1961 deals with Tax Deducted at Source (TDS) on commission, salary, or prize money earned from the sale of lottery tickets.
People believe a lottery ticket is simply a fortune bag that brings money. However, only some people know the tax duty associated with the fortune bag. Section 194G specifies TDS on the purchase, distribution, and other actions related to lottery tickets.

Scope of section 194G

Any income made by a person in the form of commission, payment, or prize on lottery tickets (deductee) who has sold lottery tickets (including stocking, distributing, and purchasing) is subject to taxation. The individual in charge of making such a payment (deductor) with an income greater than Rs 15,000 must deduct income tax before making the payment.

Rate of TDS u/s 194G

A 5% tax deduction will be made at the source for such income. No additional taxes, such as surcharges or cesses, will be imposed on the said rate. If the deductee’s PAN is not provided, the tax deduction rate of 20% will apply. However, Tax can only be deducted if the amount is at most Rs 15,000.

When to Deduct TDS u/s 194G

If you win money from a lottery, the Tax can be taken when the money is deposited into your account or when you are paid in cash, check, or another form, whichever comes first. Even if the funds are transferred to a temporary account, they are still considered payments to you. If you earn more than Rs. 15,000 from lottery tickets in a year, the company that pays you must deduct some taxes before giving your money.
TDS should be deducted earlier in the following situations:
At the moment, such income is credited to the receiver’s account.
At the moment of payment in cash, cheque, ECS, or any other method.

Certificate Of No Or Lower TDS Under 194G

You can get a certificate from the assessing officer (AO) using Form 13 to authorize the payer to pay no tax or a lesser deduction rate. To take advantage of this option, you must provide your Permanent Account Number (PAN) by Section 206AA(4).

Responsibilities of the Deductor

  1. Filling TDS Returns: The deductor is responsible for filing a quarterly TDS return (Form 26Q) and reporting the Tax deducted to the government.
  2. Issuing TDS Certificates: The deductor must send the payee a TDS certificate on Form 16A showing the amount of Tax deducted and deposited.

That concludes this blog post on Section 194G of the Income Tax; please leave a comment if you have any further questions or concerns.


1. What is the highest amount that can be deducted without paying Tax under 194G?

Ans: If the amount of commission or salary received is at most Rs. 15,000 in a given fiscal year, no tax must be deducted.

2. What is the TDS rate for brokerage?

Ans: The TDS rate will be 5%.

3. Does 44AD apply to commission income?

Ans: Section 44AD will not apply to an agency or business that earns money through commissions or brokerage.

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