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4.8 Star User RatingIn this part of our TDS series, we will discuss the concept of 2 important sections of the tax deduction, which are:
TDS on Winnings from Lottery or Crossword Puzzles: Section 194B:
TDS on Winnings from Race Horses: Section 194BB:
Have you ever wondered about people who win money on game shows like Kaun Banega Crorepati, Bigg Boss, Indian Idol, etc., paying tax or not? Do they take the whole money home?
The answer is NO. This is where the concept of TDS u/s 194B comes into play. Under this section, TDS is deducted from any income earned as winnings from the lottery, crossword puzzles, card games, or other ways like entertainment shows; game shows on TV, etc. From the money paid for winnings from the lottery, crossword puzzles, card games, and other similar incomes, the payer should deduct 30% TDS if the amount exceeds Rs.10,000.
Applicability of Section 194B
The payer who pays the price money is required to deduct TDS under Section 194B, provided the value of the prize or earnings exceeds ₹10,000.
If the winning amount exceeds Rs.10,000 then 30% is the TDS rate on the actual winning amount or value to be deducted.
The TDS must be deducted when the winning amount is paid.
The person responsible for the tax deduction, as discussed, if fails to deduct tax at source before paying the winning amount, then this could lead to a minimum imprisonment of 3 months and a maximum imprisonment of 7 years. Additionally, a fine may also be imposed.
The deadline for depositing TDS depends on the month of credit and the type of deductor. For Government Deductors, the TDS must be deposited by the 7th of April if the credit is made in March. For Other Deductors, the deadline is 30th April for the same month. For any other month, the TDS must be deposited within 7 days after the end of the month in which the deduction is made.
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The trend of organizing racehorses has seen a huge uproar in the past few years. With so many people betting on their favorite “studs” to win money, the intervention of Income Tax Law has surely not been far behind. This brought into existence Section 194BB.
As per this section, a person
TDS Rate under section 194BB is 30% plus surcharges. The deduction is made at the time of payment. If the prize is paid in installments, a TDS deduction will be made at the time of each installment. No tax deduction will be required if the winning amount is within Rs 10000.
The penalty provisions are similar to section 194B. The person responsible for the tax deduction, as discussed, if fails to deduct tax at source before paying the winning amount, then this could lead to a minimum imprisonment of 3 months and a maximum imprisonment of 7 years. Additionally, a fine may also be imposed.
Tax on Rs. 1 Crore lottery would be Rs. 3433200 (i.e., It would be taxed at 30%+ surcharge 10%+ Cess 4%)
Taxes on Poker Winnings will be taxable at 30% the highest tax bracket.
The income tax deducted on lottery winnings cannot be claimed as a refund as it is the straight income tax deducted from the winnings of the assessee.
The money earned from such game shows is taxable under the Head of Other sources.
The entire amount received will be taxable at the flat rate of 31.20%.
The award winner would have Rs 15.75 crores in their bank account after 10 percent agent commission and 30% tax is deducted.
Yes, over and above the prescribed limit.
