CMA Intermediate · Direct and Indirect Taxation · Income from Other Sources
Meera won Rs 3,00,000 in a lottery and had spent Rs 20,000 on buying tickets. Under the Income-tax Act, 2025, what amount is chargeable to tax as income from the lottery winnings (ignoring TDS and the rate of tax)?
The taxable amount is Rs 3,00,000. Section 94(4) of the Income-tax Act, 2025 disallows any deduction for expenditure related to lottery winnings, so the Rs 20,000 spent on tickets cannot be reduced from the prize money received.
- ARs 2,80,000
- BRs 3,00,000Correct
- CRs 2,50,000
- DRs 3,20,000
Explanation
Section 94(4) bars any deduction for expenditure or allowance related to winnings from lotteries. The ticket cost of Rs 20,000 therefore cannot be set against the prize. The taxable amount is the full Rs 3,00,000. Rs 2,80,000 wrongly deducts the cost.
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