Lump-sum rates

A lump-sum rate refers to a single, uniform tax rate applied to certain categories of income or specific transactions, rather than the progressive slab system where the rate changes with income levels. This approach simplifies compliance because both taxpayers and authorities can determine the tax due without detailed calculations. Such flat rates are commonly used for items like lottery prizes, certain dividend payments, or incomes taxed under simplified schemes, and the tax levied at this rate typically represents the final liability on that income.

Illustration:

For example, if a person receives ₹5 lakh from a lottery, the entire amount might be taxed at a fixed rate of 30%, regardless of their other earnings. Similarly, some forms of dividend income may attract a standard rate—such as 10%—that applies uniformly across all income groups.