Section 2(24)(ix): Why Your Lottery or Game Show Winnings Aren’t Fully Yours

When people think of income, the usual answers come up — salary, rent, or business profit. But the Income Tax Act goes much further. It treats any inflow that increases your wealth as income, even if it came from luck, chance, or one-time winnings. That’s where Section 2(24)(ix) comes in. It ensures that unexpected earnings — like winning a car on a TV show or ₹5 lakh in a crossword contest — don’t slip past the tax radar. The idea is simple: if it benefits you financially, it counts as income.

What Section 2(24)(ix) Actually Says

This clause states that any winnings from lotteries, crossword puzzles, races, card games, or other similar games are part of taxable income. So, whether you win cash, a bike, or a holiday trip — the market value of that prize is treated as income in your hands.

In short, luck isn’t tax-free. The law treats it just like any other earning for tax purposes.

Why This Rule Exists

Before this rule, taxpayers often argued that winnings were not “income” since they weren’t regular or earned through work. As games & lotteries became popular, the government saw the need for clarity."

Section 2(24)(ix) closed that gap. It ensures uniform taxation & prevents avoidance by classifying all such receipts as income. It also reflects the broader principle that taxability doesn’t depend on how you earn — only on what you earn.

Everyday Examples

Let’s make it relatable.

• A person wins ₹10 lakh from a state lottery.
• Another wins ₹5 lakh on a TV quiz show.
• Someone else earns ₹2 lakh through online poker.

All these are covered by Section 2(24)(ix). Even if you win goods instead of cash, their fair value becomes taxable. It’s that straightforward.

Also Read: Taxability of Subsidies, Grants & Cash Incentives

How Tax Is Calculated on Such Winnings

Unlike salary or business income, winnings don’t enjoy slab-wise treatment. They are taxed at a flat 30% rate, plus surcharge and cess, under Section 115BB.
For any amount above ₹10,000, the payer deducts TDS under Section 194B before paying you.

So, if you win ₹10 lakh, the organizer keeps ₹3 lakh for tax & gives you ₹7 lakh. When filing your ITR, you still show the full ₹10 lakh under “Income from Other Sources.”

Link with Other Provisions

This section doesn’t work in isolation. It connects with:

• Section 115BB – fixes the flat tax rate.
• Section 194B – mandates TDS deduction.
• Section 10(17A) – exempts specific government awards.
  Together, these ensure winnings are taxed uniformly & transparently.

Foreign Winnings and Indian Residents

Now, here’s the catch — what if you win abroad?

• If you are an Indian resident, global income is taxable in India. So, winnings earned outside the country also count. However, income accruing or arising outside India shall not be deemed to be received in India until you actually bring it back.
• For non-residents, only winnings received or earned in India are taxable. Residency therefore plays a key role in deciding the final liability.

Connection with Voluntary Contributions and Electoral Trusts

While this clause deals with winnings, the wider Section 2(24) family also includes special provisions relating to voluntary contributions received by electoral trusts. Those donations are treated as income to maintain transparency in political funding.

The common goal behind all these clauses is consistency — every form of receipt, whether voluntary or unexpected, should be taxed fairly.

Reporting Winnings in Your ITR

Disclose the full amount of winnings under Income from Other Sources.
✔️ Mention the gross amount before TDS.
✔️ Include the TDS already deducted."
✔️ Don’t claim deductions or expenses against it — the law disallows them.

Even if tax was deducted, failure to report may invite penalties for under-reporting income.

Also Read: Tax Exemption for Awards & Recognitions

Illustration

Let’s say you won ₹25 lakh on a game show. The organizer deducts ₹7.5 lakh as TDS & pays ₹17.5 lakh. When filing your return, you must still show ₹25 lakh as income. Even travel or participation costs cannot be deducted.

That’s how the law ensures total transparency — tax on the full prize, not just what reaches your bank.

Comparison with Regular Income

This makes it clear that winnings are treated separately — high rate, no exemptions.

Common Misconceptions

• “It’s a gift, not income.”
  Wrong — if the prize comes from a contest, it’s taxable.
• “I didn’t get the money yet, so it’s not income.”
  The moment your win is confirmed, it counts.
• “I can deduct my entry cost.”
  Expenses related to the contest are not deductible.

Understanding these basics can help you avoid unexpected notices later.

Key Takeaways

• Section 2(24)(ix) includes any winnings from lotteries, crossword puzzles, races, or card games as income.
• Tax is charged at a flat 30% rate under Section 115BB.
• Income accruing or arising outside India isn’t deemed received until remitted.
• TDS under Section 194B applies for prizes above ₹10,000.
• Report it under Income from Other Sources in your ITR.

Also Read: TDS on Online Gaming Winnings

Conclusion

Winning is thrilling — until tax season arrives. Section 2(24)(ix) ensures that sudden gains are treated fairly, just like regular income. It prevents misuse, keeps the system transparent, & reminds us that even luck has a price tag.

If you’ve received winnings or aren’t sure how to file them, visit CallMyCA.com. Our CA experts simplify compliance, help you report accurately, and ensure you never lose sleep over taxes.