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CA Intermediate · Taxation · Income from Other Sources

Meera, a resident individual, bought a lottery ticket for ₹10,000 and won a first prize of ₹5,00,000 in the tax year 2026-27. She spent ₹4,000 travelling to collect the prize. What amount is chargeable to tax under the head Income from Other Sources in respect of this prize?

The full ₹5,00,000 is chargeable. Lottery winnings are taxed on the gross amount at a special flat rate, and no expenditure, such as the ticket cost or travel to collect the prize, can be deducted from them. Deducting the ticket cost or the tax is therefore wrong.

  1. A₹4,86,000
  2. B₹5,00,000Correct
  3. C₹4,90,000
  4. D₹3,50,000

Explanation

Winnings from lotteries are taxed on the gross amount at the special flat rate. No deduction is allowed for the ticket cost or for any expenditure incurred to earn the winnings. So ₹5,00,000 is chargeable. ₹4,90,000 wrongly deducts the ticket cost, and ₹3,50,000 wrongly deducts tax at 30%.

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