Lottery Taxes
Winning a lottery can seem like a dream. However, even lotteries come with reality checks for winners – in the form of Lottery Taxes!
If you’ve been looking for lotteries with zero lottery taxes, then you’re at the right place.
Gains from such sources are considered a form of income by most governments. This means that you are held responsible by law for paying a high cess on any form of income or prize you win.
Besides that, lottery taxes are also a great source of revenue for the government and can be beneficial for society. It might be useful to improve the condition of education, health, and social welfare – at least in theory.
Here’s an article to answer all your questions about global betting that you can now play online in India. We’ve also taken care to resolve all your taxation-related questions in our guide.
So, let’s get started.
Tax-Free Lottery Prizes Around the Globe
These are lottery taxes where the award money isn’t levied or the duty has already been deducted.
Below is a list of tax-free lottery games around the globe.
- Australia Monday Lotto
- Australia Oz Lotto
- Australia Powerball
- Australia Saturday Lotto
- Australia Wednesday Lotto
- Austria EuroMillions
- Austria Lotto
- Canada Lotto 6/49
- Eurojackpot** (tickets purchased in Spain)
- France Lotto
- Germany Lotto
- Hungary Hatoslotto
- Hungary Otoslotto
- Ireland Daily Million
- Ireland Lotto
- Italy MillionDAY
- Japan Loto 6
- Japan Loto 7
- Japan Mini Loto
- New Zealand Lotto
- New Zealand Powerball
- Ontario 49
- South Africa Daily Lotto
- South Africa Lotto
- South Africa Powerball
- Spain EuroMillions**
**Except for Spanish citizens, all others get a full cess refund. This is to prevent double taxation.
US Lottery Taxes and Percentages
US Powerball
The Powerball lottery taxes are deducted at source at a rate of 24%. An additional cess is also due the next year to the IRS that amounts to 13% of the total amount. The regulations allow the winner to choose whether to receive the payment as a lump sum or in installments.
US Mega Millions
About 24% of federal cess is withheld at payment and more depending on the state of residence and ticket purchase. An additional 13% is also due to the IRS later on. Awards up to $599.99 are cess-free.
Cash4Life
The awards up to $600 are cess-free. While awards above $5,000 are subject to a cess rate of 24% for U.S. residents and 30% for non-U.S. residents.
Texas Lotteries
The awards above $5,000 are subject to a cess rate of 25% for U.S. residents and 30% for non-U.S. residents.
Lottery Taxes Around the World
Chile
Chile has one cess rate of 17%.
Colombia
Lottery taxes in Colombia are levied at 20% of the award amount.
Italy
Italy has seven lottery taxes levied on the lotto.
Tax band 1: Prizes below €100 are cess-free.
Tax band 2: Awards between €100.01 and €300 are subject to a cess rate of €1.03.
Tax band 3: Winnings between €300.01 and €500 are subject to a local retailer fee of €3.10.
Tax band 4: Winnings between €500.01 and €1,000 are subject to a local retailer fee of €3.10 and a cess rate of 6%.
Tax band 5: Awards between €1,000.01 and €5,200.00 are subject to a local retailer fee of €6.20 and a cess rate of 12%.
Tax band 6: Winnings between €5,200.01 and €52,000.00 are subject to a local retailer fee of €5.16 and a cess rate of 20%.
Tax band 7: Winnings above €52,000.01 are subject to a cess rate of 20%.
The cess rate only applies to the portion of the prize exceeding €500.
Winnings from the Italy MillionDAY lotto and the Italy Lotto are subject to a cess rate of 8%. While the winnings from the 10eLotto are levied at 11%.
Kazakhstan
Winnings above $41 are subject to a cess rate of 10% for Kazakhstani residents and 20% for non-residents.
Mexico
Lotteries in Mexico are levied at a rate of 7%.
Peru
All winnings in Peru have a cess rate of 10%.
Philippines
The lotto winnings in the Philippines above ₱10,000.00 are subject to a cess rate of 20%.
Poland
Lotto awards in Poland above PLN 2,280 are subject to a cess rate of 10%.
Portugal
Lotto winnings up to €5,000 in Portugal are cess-free. Whereas, winnings exceeding €5,000 are subject to a cess rate of 20%.
Romania
In Romania, awards up to 66,750 RON are subject to a cess rate of 1%. Whereas, awards between 66,750 RON and 445,000 RON are subject to a flat cess rate of 667.50 RON and a cess rate of 16% on the amount over 66,750 RON.
Awards above 445,000 RON are subject to a flat cess rate of 61,187.50 RON and a cess rate of 25% on the amount over 445,000 RON.
Spain
In Spain, prizes up to €40,000 are cess-free. While prizes above €40,000 are subject to a cess rate of 20%.
Ukraine
Ukraine has a total cess rate of 19.5% for lotto winnings.
We’ve included a more detailed explanation for India, which you can find below.
European Lottery Taxes
Lotto 6 aus 49
The German lotto has a minimum prize amount of €1 million and all winnings are cess-free.
EuroMillions
Euro Millions is a weekly European lotto played across 9 countries. The winning prize is between €17-€190 million with 13 tiers of prizes.
The earnings from the EuroMillions are only levied in Spain, Portugal, and Switzerland.
EuroJackpot
The EuroJackpot has 12 tiers of prizes with a maximum prize of €90 million. Prize winnings above €40,000 are levied at 20%.
People from India aren’t required to pay any duties when playing the EuroJackpot online. However, they might be required to pay duties when playing from the member states.
La Primitiva
La Primitiva is accessible to players from all countries. The lottery ticket costs around €1 from vendors in Spain and a little extra online. The minimum jackpot starts at €2,000,00.00. About 20% of any prize earnings from La Primitiva above €2,500 are levied.
El Gordo
El Gordo has prize money of up to €2.3 billion and is accessible to players in India online or in person. There are 8 prize categories to be won. Prizes above €40 have a cess rate of 20%.
SuperEnalotto
SuperEnalotto has a prize of a minimum of €1.7 million and a maximum of €209,1 million. People in India can buy the SuperEnalotto ticket online or through an agent in Europe.
All prizes below €100 are cess-free and those between €100 to €500 receive a filed cess amount. While prizes above €500 have a lottery money tax rate of 12%.
France Loto
The French Loto has six prize categories with a minimum prize amount of €2 million. The lotto is accessible to players all around the world online.
French loto prizes are cess-free but local cess rates still apply.
How are Lottery Winnings in India Taxed?
The flat rate for lottery income tax in India is around 31.20%. All tax on lottery winnings is deducted at the time of payment. For payments made in installments, the duty is deducted at the time of payment.
The government of India controls the tax on overseas lottery winnings and national as well. They are taxed as ‘income from other sources’ in India, as per section 194B under Income Tax Act. However, the rules of the lottery tax rate differ for each state. For example, the Andhra Pradesh 1358F act on horse race and betting regulations.
According to section 80C or 80D, there is also no lottery tax deduction on the prize received. The prize money tax must be paid in full. This means the slab rates don’t apply to winnings.
However, considering lottery tickets as tax deductible is possible for payments made to agents. There is also no cess for consolation prizes or awards won.
Prizes above 10 million are also required to pay a surcharge that is 15% of the duties levied.
What Are the EC and the SHEC?
EC is the Education Cess, whereas SHEC is the Secondary and Higher Education Cess.
These are charges that are also included in the levied amount. The EC is 2% of total duties and surcharge. While the SHEC is 1% of the total charges and surcharge.
What Is Tax Deducted At Source (TDS)?
Tax deducted at source is the practice of collecting duties at the source of income. The lottery organizer will deduct the lottery taxes from your lottery winnings and the amount left is paid out as the prize money.
How to Calculate Tax on Lottery Winnings in India?
Here’s how to break down your lottery amount after taxes – starting with three key figures you need to keep in mind:
- Tax percentage: 30% of lottery winnings
- Surcharge: 15% of total cess
- EC and SHEC: 3% of the total cess amount plus surcharge
Let’s understand this better using the example below:
For example, the total prize you earn from your lottery is 5 crore.
The income tax would then be 30% of this 5 crore.
Income tax = 1.5 crore
The surcharge will then be 15% of 1.5 crores.
Surcharge = 0.15 – 0.225 crore
The EC and SHEC are now 3% of the total cess and the surcharge.
EC + SHEC = 0.495 – 0.05175 crore
After you add the lottery taxes, you would get a total tax amount payable which is between 2.145 crore and 1.78 crores.
FAQs
Are Lottery Winnings Taxed in India?
Yes. According to the Finance Act of 1986, all lottery winnings are levied in India. Tax percentage: 30% of lottery winnings.
Which Lotteries Are Taxed in India?
All lottery winnings with prize money above ₹10,000 are levied in India.
