Winning a prize in India usually comes with a tax deduction before the money reaches you. Since 1 April 2026, the rules sit in the new Income-tax Act, 2025, but the core treatment is familiar from the old section 194B. Here's how it works in plain language.
The basic rule
- Section: TDS on winnings from lotteries, crossword puzzles, card games and other games, including contests and quizzes, is now covered by section 393(3) of the Income-tax Act, 2025 (previously section 194B of the 1961 Act).
- Rate: a flat 30%, plus surcharge where applicable and 4% health and education cess.
- Threshold: the payer deducts TDS when a single winning exceeds ₹10,000.
- No basic exemption: winnings are taxed at the flat rate. Your slab rate and the basic exemption limit don't reduce it.
Worked example
| Item | Amount |
|---|---|
| Cash prize | ₹50,000 |
| Tax at 30% | ₹15,000 |
| Cess at 4% of tax | ₹600 |
| Total deducted | ₹15,600 |
| You receive | ₹34,400 |
Prizes of ₹10,000 or less
If a single prize is ₹10,000 or less, the organiser won't deduct TDS. That doesn't make it tax-free. Winnings are still taxable at 30% and must be reported in your income tax return.
Prizes in kind
If you win a phone, a laptop or a trip, tax is calculated on its fair market value. When the prize is wholly in kind, or the cash part isn't enough to cover the tax, the tax must be paid before the prize is released. In practice, organisers either pay the tax themselves or ask the winner to pay it first. Check the official rules so you aren't surprised.
Is a scholarship taxed the same way?
No. Scholarships granted to meet the cost of education are treated differently from contest winnings and are generally exempt. A cash prize from a competition is a winning, even if it's awarded to a student. If a programme calls itself a scholarship but works like a contest prize, ask the organiser how it will be treated.
What to do as a winner
- Give the organiser your PAN; without it, a higher deduction can apply.
- Ask for the TDS certificate and check that the deduction appears in your annual tax statement.
- Report the winning in your return under income from other sources.
Watch out for "tax payment" scams
Fraudsters often say you must pay "tax" on a prize to a personal account or UPI ID. Genuine tax is deducted by the organiser or paid to the government with a challan, never to an individual. If someone asks you to send money to claim a prize, read how to spot scams.
This guide is general information based on the law in force from 1 April 2026 and isn't tax advice. For large prizes or unusual cases, consult a chartered accountant.
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