# Special Rates of Tax

Certain incomes are taxed at special (flat) rates instead of the slab rates. The key sections are listed below.

## Sec 115BB — Casual Winnings

Rate: 30%
Applies to winnings from lotteries, crossword puzzles, card games, horse races, gambling, etc.

## Sec 115BBE — Unexplained Income (Sec 68 to 69D)

Tax rate: 60% + 25% surcharge + cess (effective ~78%)
Covers unexplained money, investments, expenditure, etc.
No basic exemption is allowed.
No expenditure / allowance / deduction is allowed against such income.
No set-off of loss against such income.

## Sec 115BBF — Royalty from Patents

Rate: 10%
Income by way of royalty from a patent developed and registered in India.
'Developed in India' = at least 75% of the expenditure incurred in India.
No expense is allowed as deduction.

## Sec 115BBG — Carbon Credits

Rate: 10%
Income from transfer of carbon credits.
No expenditure allowed.

## Sec 115BBJ — Online Games

Rate: 30%
Tax on net winnings from online games.

## General Notes

Deductions under Chapter VI-A are NOT available against these special incomes.
Basic exemption is NOT available against these special incomes (except in sections 111A, 112 and 112A for resident individuals/HUF — see capital gains lesson).

Worked example

### Example 1

Example: Mr. A wins ₹5,00,000 in a TV game show and incurs ₹20,000 expenses to participate. Tax under Sec 115BB = 30% × ₹5,00,000 = ₹1,50,000. The ₹20,000 expense is NOT allowed as deduction.

### Example 2

Example: During assessment, ₹10,00,000 of unexplained cash is found in Mr. B's books. Tax under Sec 115BBE = 60% of ₹10,00,000 = ₹6,00,000 (plus surcharge & cess). No basic exemption, no expense, no set-off available.

⚠️ Common exam mistakes

Allowing Chapter VI-A deductions (e.g., 80C) against these special-rate incomes — they are NOT allowed.
Setting off business losses against unexplained income under Sec 115BBE — not allowed.
Forgetting that 'developed in India' under Sec 115BBF requires at least 75% of expenditure to be incurred in India.
Treating the basic exemption limit as available against winnings (Sec 115BB) — it is not.

Bare-Act text Sections 115BB, 115BBE, 115BBF, 115BBG, 115BBJ · Income-tax Act, 1961 · click to expand

Sec 115BB: Notwithstanding anything contained in any other provision of this Act, where the total income of an assessee includes any income by way of winnings from any lottery or crossword puzzle or race including horse race or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, the income-tax payable shall be the aggregate of— (i) the amount of income-tax calculated on income by way of winnings from such lottery at the rate of thirty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).

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