Race courses in the country have issued notices informing the stakeholders about the new TDS requirement from April 1 for winnings from horse races.

Under the new provision, the race courses are required to deduct TDS whereby the allowed winnings are in aggregate INR 10,000 or more in a single financial year. Earlier this requirement was for every single instance exceeding INR 10,000 or more.

The race course of Mumbai advised the stakeholders to provide necessary KYC details that will enable them to claim benefit of TDS. The deducted TDS will be reflected in ITR-26AS.

These amendments were required as there were instances of avoiding tax deduction by splitting winnings into transactions under INR 10,000. Section 115BB of the Income Act, 1961 provides for the rate of tax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature. The winnings are subject to TDS at 30% and with surcharge and cess the effectual rate will be 31.2%.

Usually, the taxpayers are subject to a tax refund in case the TDS portion is more than their tax liability for a particular financial year. However, in the case of winnings from horse races, taxpayers cannot claim any refund against this TDS amount.

The government has carried out similar amendments to winnings from online gaming whereby the TDS will now be on every rupee of the winning.

Contrary to a initial date of 1 July 2023, the new requirements will now take effect on 1 April 2023. The finance minister has introduced the amendments in this regard in the Lok Sabha on Friday.