Agent commission, 30% income tax, TDS, surcharge and cess on Kerala lottery winnings, the new Income-tax Act, 2025, and GST on tickets, with a worked example.
A ₹1 crore first prize does not mean ₹1 crore in your bank account. Several deductions apply before and after the prize is paid. This guide explains each one in plain language.
This is general information based on public sources as of October 2026, not tax advice. Tax rules change; check with a chartered accountant or tax professional before planning around a prize.
Two deductions before you are paid
The Directorate of Kerala State Lotteries states that the agent's commission and income tax are deducted from the prize amount.
- Agent commission. The agent who sold the winning ticket receives a commission on the prize. News reports on large prizes put it at 10% of the prize amount.
- Income tax deducted at source (TDS). Tax is deducted from the remaining amount before the prize is credited. National lottery rules require the organising state to deduct income tax where applicable and to credit the prize to the winner's bank account.
How lottery winnings are taxed
Lottery winnings are taxed differently from salary or business income:
- They are taxed at a flat 30%, whatever your other income.
- The basic exemption limit does not apply, and you cannot reduce the winnings with deductions or expenses.
- A surcharge applies on top of the tax if your total income crosses the higher thresholds, which large bumper winners usually do.
- A 4% health and education cess is charged on the tax plus surcharge.
Under the Income-tax Act, 1961, these rules were in Section 115BB (tax on winnings) and Section 194B (TDS on winnings).
TDS: when tax is deducted at source
Tax is deducted at 30% on winnings above ₹10,000. Since 1 April 2025, that limit applies to each win separately, not to your total winnings in a year.
Smaller prizes paid without TDS are still taxable. They should be reported in your income-tax return, where tax at 30% applies to them.
The new Income-tax Act, 2025
The Income-tax Act, 2025 came into force on 1 April 2026 and replaced the Income-tax Act, 1961. It renumbered most provisions and introduced a single "tax year" in place of the previous year and assessment year. Published tax guides report that the TDS provisions are now consolidated in a single section (Section 393) and that the 30% rate on winnings continues. If you see new section numbers on a tax document, that is why.
A worked example: ₹1 crore first prize
The weekly Kerala lotteries currently offer a ₹1 crore first prize. Using the deductions described above:
| Step |
Amount |
| Prize |
₹1,00,00,000 |
| Agent commission (10%) |
− ₹10,00,000 |
| Amount after commission |
₹90,00,000 |
| TDS at 30% |
− ₹27,00,000 |
| Credited to the winner (approx.) |
₹63,00,000 |
That is before any surcharge and cess that may still be due when you file your return, which depend on your total income for the year.
For the largest bumper prizes the difference is bigger. When the 2025 Thiruvonam Bumper paid a ₹25 crore first prize, news reports estimated that the winner would keep roughly ₹12.9 crore after commission, tax, surcharge and cess.
GST is already in the ticket price
Buyers do not pay GST separately: it is built into the ticket price. GST on lotteries was a uniform 28% from 1 March 2020 and rose to 40% from 22 September 2025. It is levied when the state sells tickets to agents and distributors. After the increase, the Kerala government said it would keep ticket prices unchanged and absorb the higher tax through adjustments to prize money, agent commissions and its own share.
Practical tips for winners
- Keep copies of every claim document and the payment advice you receive.
- Ask for the TDS certificate, and check that the deducted tax appears in your Annual Information Statement (AIS) on the income-tax portal.
- Include the winnings in your income-tax return for the year and pay any balance, such as surcharge and cess, on time.
- Talk to a tax professional early, especially for bumper prizes.
For the claim process itself, see our guide on what to do after winning.
Sources
- Section 115BB, Income Tax Department: incometaxindia.gov.in
- Section 194B per-transaction threshold from 1 April 2025, TaxGuru: taxguru.in
- Income-tax Act, 2025, Wikipedia: en.wikipedia.org/wiki/Income-tax_Act,_2025
- TDS on winnings under the Income-tax Act, 2025 (Section 393), TDSMAN: blog.tdsman.com
- Directorate of Kerala State Lotteries, prize claim: statelottery.kerala.gov.in
- Lotteries (Regulation) Rules, 2010, Ministry of Home Affairs (copy hosted by the Government of Puducherry): py.gov.in
- ₹25 crore prize take-home estimate, The News Minute: thenewsminute.com
- GST on lotteries raised to 40%, TaxGuru: taxguru.in
- Kerala keeps ticket prices unchanged after GST increase, Onmanorama: onmanorama.com
