Section 194G of the Income Tax Act, 1961, mandates Tax Deducted at Source (TDS) on commission or remuneration paid to lottery ticket distributors or agents. Below is a detailed breakdown of its provisions:
1. Applicability of Section 194G
✅ Covered Payments:
- Commissionfor selling lottery tickets (including state/government lotteries).
- Bonus/incentiveslinked to ticket sales.
❌ Exclusions:
- Direct lottery winnings(covered under Section 194B).
- Payments ≤ ₹15,000in a financial year (proposed to increase to ₹20,000 from April 2025) .
2. TDS Rate & Deduction Rules
| PARAMETER | DETAILS |
| Standard Rate | 5% (if PAN provided) . |
| PAN Not Provided | 20% (under Section 206AA) . |
| Threshold | ₹15,000/year (₹20,000 from FY 2025-26) . |
| Timing | Deducted at the earlier of: |
- Credit to agent’s account.
- Actual payment (cash/cheque) . |
Example:
- Commission Paid: ₹30,000 (PAN provided).
- TDS (5%): ₹1,500 → Net Payment: ₹28,500.
3. Who Deducts TDS?
- State lottery departments.
- Private lottery operators.
- Authorized distributors.
4. Compliance Requirements
- TDS Deposit: By the 7th of the next month(March: April 30) .
- TDS Return: File Form 26Qquarterly .
- TDS Certificate: Issue Form 16Ato agents .
5. Exemptions & Lower Deduction
- No TDSif annual commission ≤ ₹15,000 (₹20,000 from 2025) .
- Form 15G/15H: Agents with income below taxable limits can submit to avoid TDS .
- Lower TDS Certificate (Form 13): Obtain from the Assessing Officer if tax liability is nil/low .
6. Penalties for Non-Compliance
- Late Deduction: Interest @ 1% per month.
- Late Payment: Interest @ 5% per month.
- Non-Filing (Form 26Q): Penalty up to ₹1 lakh.
7. Key Changes (Budget 2025)
- Threshold Increase: From ₹15,000 to ₹20,000 (effective April 2025) .
- Rate Rationalization: Proposed reduction from 5% to 2%for small agents .
Key Points
🔹 5% TDS on lottery commissions > ₹15K (₹20K from 2025).
🔹 PAN Mandatory to avoid 20% deduction.
🔹 Quarterly Filing: Use Form 26Q for returns.
🔹 Agents: Can claim refund via ITR if excess TDS deducted.
