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CA Intermediate · Taxation · Income from Other Sources

Karan won Rs 3,00,000 from a lottery in tax year 2026-27. He had spent Rs 20,000 on buying lottery tickets during the year. He has no other income. What is the tax on this income at the special rate, before surcharge and cess?

The tax is Rs 90,000. Lottery winnings are taxed at a flat 30% on the gross amount, and no expense, including the cost of tickets, is deductible. Thirty percent of Rs 3,00,000 is Rs 90,000 before surcharge and cess.

  1. ARs 90,000Correct
  2. BRs 84,000
  3. CRs 75,000
  4. DRs 60,000

Explanation

Winnings from lotteries are taxed at a flat rate of 30%, and no deduction for expenditure, such as ticket cost, is allowed against them. Tax is 30% of Rs 3,00,000 = Rs 90,000. Rs 84,000 wrongly deducts the ticket cost first, giving 30% of Rs 2,80,000.

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