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CS Executive · Tax Laws and Practice · Income from Other Sources

Under the Income-tax Act, 2025 (applicable from the June 2027 session), Mr. Arjun Mehta wins Rs 4,00,000 from a lottery and spent Rs 20,000 on buying the tickets. What is the amount of income from this winning that is chargeable under the head Income from other sources?

The chargeable amount is Rs 4,00,000. Under section 94(4) of the Income-tax Act, 2025, no deduction for any expenditure or allowance related to lottery winnings is allowed, so the ticket cost of Rs 20,000 cannot be subtracted from the winnings.

  1. ARs 3,80,000, being winnings less the cost of tickets
  2. BRs 4,00,000, as no deduction for related expenditure is allowedCorrect
  3. CRs 2,00,000, being half of the winnings
  4. DRs 3,60,000, after a deduction of 10% of the winnings

Explanation

Section 94(4) of the Income-tax Act, 2025 denies any deduction for expenditure or allowance related to income from winnings from lotteries, games and gambling. The full Rs 4,00,000 is therefore taxable. Deducting the Rs 20,000 ticket cost, giving Rs 3,80,000, is wrong because that cost is not allowed.

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