Section 194B: TDS on Winnings from Lottery or Crossword Puzzles
Have you ever wondered about people who win money on game shows like Kaun Banega Crorepati, Bigg Boss, Indian Idol etc pay tax or not? Do they take the whole money home?
Who is required to deduct TDS u/s 194B?
The answer is NO. This is where the concept of TDS u/s 194B comes into play. Under this section, TDS is deducted on any income earned as winnings from lottery or crossword puzzle or card games or other ways like entertainment shows, game shows on TV etc.
Every p comes under the income as referred above is required to release the income only after deducting tax.
What is the rate, time etc of TDS u/s 194B?
TDS under this section has to be deducted @ 30%, at the time when payment is made. If the amount of winning does not exceed ?10,000 during the FY then no tax u/s 194B shall be deducted.
Penalty & prosecution when failed to comply with provisions of Sec 194B
The person responsible for the tax deduction as discussed, if fails to deduct tax then as per section 271C, he needs to pay a penalty equal to the amount of tax deducted will be levied on him/her.
Secondly, as per section 276B, only deduction of such tax is not enough, It should be deposited with the government. Non-doing this can result into imprisonment of minimum 3 months up to 7 years fine can be imposed.
Important Point: Sometimes it may happen that the winning from such games is not given in cash but in kind like a car, mobile phone, foreign trip etc. In these cases, the value of the gift is taken as the relevant Market Value and gift shall be released only after TDS amount is taken from the payee (receiver).