Horse racing is one of the few forms of betting that's fully legal in India - and the tax department has a dedicated section just for it. If you've won money at the races, here's exactly how much the bookmaker withholds and how to report the rest.
What Is Section 194BB?
Section 194BB requires any person responsible for paying winnings from horse races (typically a racecourse, bookmaker, or totalizator) to deduct TDS if the amount of winnings to a single person exceeds ₹10,000 in a single payment/race.
| Winning Amount | TDS Applicability | Rate |
|---|
| Up to ₹10,000 | No TDS | Nil |
| Above ₹10,000 | TDS on the entire amount | 30% (plus applicable cess) |
Taxation Under Section 115BB
Like lottery and game show winnings, income from horse race winnings is taxed under Section 115BB at a flat rate of 30% (plus 4% health and education cess, giving an effective rate of approximately 31.2%), regardless of the recipient's total income or applicable slab.
Same restrictions as lottery winnings apply: no deductions for expenses (e.g., money spent on losing bets cannot be set off against winnings from a winning bet), no Chapter VI-A deductions (80C, 80D etc.) can reduce this income, no benefit of the basic exemption limit, and no loss set-off from other heads of income against horse race winnings.
Can Losses on Other Races Be Set Off Against Winnings?
No. Each race/bet is treated independently for tax purposes. If you lose ₹50,000 across several races but win ₹15,000 on one race, you cannot net these off - the full ₹15,000 winning is taxable at 30% (with TDS deducted on it since it exceeds ₹10,000), and the ₹50,000 in losses provides no tax benefit whatsoever, as losses from owning and maintaining race horses are governed by separate (and limited) rules under Section 74A, applicable mainly to those in the business of horse racing/owning race horses - not casual bettors.
Reporting in Your ITR
Horse race winnings must be reported under "Income from Other Sources" in Schedule OS, under the category for income taxable at special rates under Section 115BB. The TDS deducted under Section 194BB will appear in your Form 26AS/AIS and can be claimed as a tax credit - since the TDS rate (30%) matches the tax rate, there is usually no additional tax payable on this specific income, but it must still be reported.
Horse race winnings vs lottery/game show winningsBoth are taxed identically at 30% flat under Section 115BB with TDS at 30% above Rs 10,000 (Sections 194BB for horse races, 194B for lotteries/game shows). The economic and reporting treatment is essentially the same - only the specific TDS section differs based on the source of the winning.
Frequently Asked Questions
If I win Rs 8,000 on a horse race, is it tax-free? ▼
No. While TDS under Section 194BB applies only above Rs 10,000, the winning itself is still taxable at the flat 30% rate under Section 115BB and must be reported in your ITR under Income from Other Sources, even if no TDS was deducted.
Can I set off my losses from other horse races against my winnings for tax purposes? ▼
No. Income from horse race winnings taxed under Section 115BB does not allow set-off of losses from other races or bets. Each winning amount is taxed on a gross basis at 30%, with no adjustment for amounts lost on other bets.
Is the tax treatment different for someone who owns and races horses professionally versus a casual bettor? ▼
Yes, to some extent. A casual bettor's winnings are taxed under Section 115BB as described. A person in the business of owning and maintaining race horses has business income/loss governed by separate provisions (including restrictions under Section 74A on set-off and carry-forward of losses from this specific activity), which is a more specialized scenario typically requiring professional tax advice.