CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 194G — Commission, etc., on Sale of Lottery Tickets (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live. Narrow; lightly litigated.
Finance Act, 2026: No amendment. (Rate reduced to 2% by the Finance (No.2) Act, 2024 w.e.f. 1 October 2024; threshold raised by the Finance Act, 2025 w.e.f. 1 April 2025.)
Mechanism: The payer of commission/remuneration/prize on lottery tickets to a stockist, distributor, purchaser or seller deducts tax where the amount exceeds the threshold.
Litigation profile: Limited. Disputes concern the commission-versus-trade-margin characterisation and the boundary with section 194H — the candour rule applies.
A. SECTION COMMENTARY
Section 194G requires any person responsible for paying income by way of commission, remuneration or prize (by whatever name called) on lottery tickets — to a person who has been stocking, distributing, purchasing or selling lottery tickets — to deduct tax where the amount exceeds the prescribed threshold. It is the deduction code for the earnings of lottery distributors and agents, and sits beside section 194B (which taxes the winnings) and section 194H (general commission/brokerage).
Rate and threshold — recent rationalisation
The Finance (No.2) Act, 2024 reduced the rate under section 194G from five to two per cent with effect from 1 October 2024, and the threshold was raised (to ₹20,000) by the Finance Act, 2025 with effect from 1 April 2025. These are rate/threshold rationalisations; the structure of the section is unchanged.
The characterisation question — 'commission' versus discount
The recurring issue is whether the benefit enjoyed by a bulk purchaser of tickets (who buys at a discount and sells at face value) is 'commission' for stocking/distributing/selling tickets within section 194G, or merely a trade margin on a principal-to-principal purchase. The answer turns on whether the relationship is one of agency (the distributor selling on behalf of the organiser, earning commission) or of sale (the distributor buying and reselling on his own account). This mirrors the agency-versus-sale enquiry that pervades section 194H.
Why direct authority is limited
Section 194G is narrow and the litigation is concentrated on the characterisation of the distributor's margin and on the boundary with section 194H. In candour, there is little section 194G-specific apex authority; the cognate agency/commission jurisprudence under section 194H governs.
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
194G. (1) Any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize (by whatever name called) on such tickets in an amount exceeding twenty thousand rupees shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of two per cent.
(2) ***
(3) ***
Explanation.—For the purposes of this section, where any income is credited to any account, whether called "Suspense Account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.
C. AUTHORITIES
Candour rule observed: section 194G generates limited direct authority. The cognate agency-versus-sale jurisprudence (shared with section 194H) is offered.
Cognate principles — agency versus sale
Commission for an agency service versus a trade margin
Principle: Section 194G bites only where the payment is, in substance, 'commission/remuneration/prize' for stocking, distributing or selling tickets — that is, for an agency service rendered to the organiser. Where the distributor buys tickets outright and resells on his own account, his margin is a trade profit, not 'commission', and the agency-based deduction does not attach. The enquiry is into the true legal relationship, not the label.
Use: The gateway test for section 194G, parallel to the section 194H agency/principal distinction.
Hindustan Coca-Cola Beverages (P) Ltd. v. CIT (2007) 293 ITR 226 (SC) — cognate on default
Principle: No second recovery from the deductor where the payee has paid the tax; section 201(1A) interest runs for the period of default.
Use: Governs the consequence of a failure to deduct under section 194G.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 194G — Commission, etc., on Sale of Lottery Tickets (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live. Narrow; lightly litigated.
Finance Act, 2026: No amendment. (Rate reduced to 2% by the Finance (No.2) Act, 2024 w.e.f. 1 October 2024; threshold raised by the Finance Act, 2025 w.e.f. 1 April 2025.)
Mechanism: The payer of commission/remuneration/prize on lottery tickets to a stockist, distributor, purchaser or seller deducts tax where the amount exceeds the threshold.
Litigation profile: Limited. Disputes concern the commission-versus-trade-margin characterisation and the boundary with section 194H — the candour rule applies.
A. SECTION COMMENTARY
Section 194G requires any person responsible for paying income by way of commission, remuneration or prize (by whatever name called) on lottery tickets — to a person who has been stocking, distributing, purchasing or selling lottery tickets — to deduct tax where the amount exceeds the prescribed threshold. It is the deduction code for the earnings of lottery distributors and agents, and sits beside section 194B (which taxes the winnings) and section 194H (general commission/brokerage).
Rate and threshold — recent rationalisation
The Finance (No.2) Act, 2024 reduced the rate under section 194G from five to two per cent with effect from 1 October 2024, and the threshold was raised (to ₹20,000) by the Finance Act, 2025 with effect from 1 April 2025. These are rate/threshold rationalisations; the structure of the section is unchanged.
The characterisation question — 'commission' versus discount
The recurring issue is whether the benefit enjoyed by a bulk purchaser of tickets (who buys at a discount and sells at face value) is 'commission' for stocking/distributing/selling tickets within section 194G, or merely a trade margin on a principal-to-principal purchase. The answer turns on whether the relationship is one of agency (the distributor selling on behalf of the organiser, earning commission) or of sale (the distributor buying and reselling on his own account). This mirrors the agency-versus-sale enquiry that pervades section 194H.
Why direct authority is limited
Section 194G is narrow and the litigation is concentrated on the characterisation of the distributor's margin and on the boundary with section 194H. In candour, there is little section 194G-specific apex authority; the cognate agency/commission jurisprudence under section 194H governs.
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
194G. (1) Any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize (by whatever name called) on such tickets in an amount exceeding twenty thousand rupees shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of two per cent.
(2) ***
(3) ***
Explanation.—For the purposes of this section, where any income is credited to any account, whether called "Suspense Account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.
C. AUTHORITIES
Candour rule observed: section 194G generates limited direct authority. The cognate agency-versus-sale jurisprudence (shared with section 194H) is offered.
Cognate principles — agency versus sale
Commission for an agency service versus a trade margin
Principle: Section 194G bites only where the payment is, in substance, 'commission/remuneration/prize' for stocking, distributing or selling tickets — that is, for an agency service rendered to the organiser. Where the distributor buys tickets outright and resells on his own account, his margin is a trade profit, not 'commission', and the agency-based deduction does not attach. The enquiry is into the true legal relationship, not the label.
Use: The gateway test for section 194G, parallel to the section 194H agency/principal distinction.
Hindustan Coca-Cola Beverages (P) Ltd. v. CIT (2007) 293 ITR 226 (SC) — cognate on default
Principle: No second recovery from the deductor where the payee has paid the tax; section 201(1A) interest runs for the period of default.
Use: Governs the consequence of a failure to deduct under section 194G.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.