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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Other Products

Under the Indian income-tax framework as generally taught for NISM X-B, a resident individual earns income from winnings of a lottery or crossword puzzle. How is such income generally taxed?

Winnings from lotteries and crossword puzzles are taxed at a flat special rate of 30% plus surcharge and cess, with no deduction for expenses and no adjustment of the basic exemption limit, so slab-rate treatment is not applicable.

  1. AAt normal slab rates after allowing the basic exemption limit to be adjusted against it
  2. BAt a flat special rate without any deduction for expenses, and not eligible for basic exemption adjustmentCorrect
  3. CAs long-term capital gain at a concessional rate
  4. DFully exempt if the winnings are below Rs 1 lakh in total

Explanation

Winnings from lotteries, crossword puzzles, card games and similar are taxed at a flat special rate (30% plus surcharge and cess) under section 115BB. No deduction for expenditure is allowed, and the basic exemption limit cannot be used against this income. Slab-rate treatment is therefore wrong.

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