Section 194BB of ITA, 1961 : Section 194Bb: Winnings From Horse Race

Explanation using Example

Imagine John visits a horse race and places a bet on his favorite horse. The horse wins, and John is excited to find out he has won a prize of ₹15,000. The race course is licensed by the government and has a bookmaker who handles the bets. According to Section 194BB of The Income-tax Act, 1961, before the bookmaker hands over the winnings to John, they must deduct tax from the amount because the winnings exceed ten thousand rupees. The bookmaker calculates the tax at the current rate, deducts it from John's winnings, and provides him with the remaining amount after tax deduction.