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TDS is deducted at source on all lottery winnings; a 2% seller deduction applies from 1 April 2026. These figures are indicative — the payer and your ITR decide the final amount.
Tax and deductions on winnings
Lottery winnings are taxed at source: TDS is deducted before the prize is paid out, at the rate in force for lottery winnings, and there is no basic-exemption relief on it.
From 1 April 2026 a 2% deduction also applies to the seller prize amount. Keep the TDS certificate — you will need it when you file your return.
Claiming a Dear Lottery prize
Prizes up to ₹10,000 are usually paid by licensed retailers against the original ticket. Above that, the claim goes to the state lottery department: you submit the signed original ticket, a photograph, proof of identity and address, a claim form and a bank account details.
Claims must be made within the deadline printed on the ticket — typically 30 to 90 days from the draw date. A ticket that is torn, burnt beyond recognition or missing its serial number will not be honoured, so photograph your ticket the moment you buy it.
TDS is deducted at source on prizes above the statutory threshold, and a 2% seller prize deduction applies from 1 April 2026. Factor that in when you estimate what actually reaches your bank account.
Frequently asked questions
Is tax deducted from lottery winnings?
Yes. TDS is deducted at source on lottery winnings at the prevailing rate, and a 2% seller prize deduction applies from 1 April 2026. Keep the TDS certificate for your return.
How do I claim a Dear Lottery prize?
Prizes up to ₹10,000 are usually paid by licensed retailers. Above that, submit the original ticket, ID proof, address proof, a claim form and bank details to the state lottery department within the deadline printed on the ticket.