Winnings from lottery, horse race? Check how Budget 2025-26 impacts TDS, TCS requirements

The Union Budget 2025-26 has raised the threshold limits for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) across multiple categories, including winnings from lotteries, horse races, and income from mutual funds, dividends, and commissions.

The government has proposed a key change in the taxation of lottery winnings, shifting from an annual aggregate limit of ₹10,000 to a per-transaction basis under Section 194B.

Key changes in TDS and TCS thresholds:

Earlier: TDS was deducted if aggregate winnings exceeded ₹10,000 in a financial year.

Now: TDS will apply to each individual transaction exceeding ₹10,000, making every win above this threshold subject to tax.

TDS threshold increased from ₹5,000 to ₹10,000, providing relief to small investors.

For senior citizens, the TDS limit has been doubled from ₹50,000 to ₹1,00,000.

For other taxpayers, the threshold has been raised from ₹40,000 to ₹50,000 when interest is earned from banks, post offices, or cooperative societies.

Threshold increased from ₹30,000 to ₹50,000, reducing tax deductions for small professionals.

TDS to apply on monthly rent exceeding ₹50,000, instead of the previous limit of ₹2.4 lakh annually.

Overseas tour packages & foreign remittances:

The TCS threshold for foreign remittances under LRS and overseas tour packages has been increased from ₹7 lakh to ₹10 lakh per year.

Impact on taxpayers

The changes are expected to benefit small taxpayers, senior citizens, investors, and professionals, ensuring that tax deductions apply only on higher-value transactions.

For lottery and horse race winners, the switch to a per-transaction threshold for TDS means more winnings could be subject to tax, especially in cases of frequent smaller wins.