TDS and Tax Rates on winning amount from lottery and game shows

Here are the objectives of tax deducted at source:

▪           It allows the working citizens to clear the tax as they earn every month. It assists the citizens in the payment of the tax at lucid instalments and avoiding the pressure of a huge down payment.

▪           To collect the tax at the time of disbursal of income to various individuals like professionals, contractors etc.

▪           The government needs funds throughout the year; hence TDS and advanced tax assist the government to run with ease.

Now that you have known the exact reason behind the government imposed tax rates on several of our activities, the below paragraphs will tell you more about tax rates which are imposed on winning amount from game shows or lotteries.

If you gain money from securing the right number at a lottery, online TV/game shows etc, it will be taxable under the main income from other sources. The income will be taxable at the direct rate of thirty percent which after including cess will amount to nearly 31%. Incomes from respective sources fall under this category –

●          Game show or any amusement television programme

●          Online Lottery

●          Betting and gambling

●          Crossword puzzle

●          Races, including horse racing etc.

Applicability of TDS

If the prize money exceeds beyond Rs 10,000, then the individual will gain the prize money after the deduction of tax deducted at source at the rate of thirty per cent under section 194 B. It is not the concern whether the income of the individual (who is the winner) is taxable or not. The prize distributor is responsible to cut the tax at the period of payment. In case of securing an amount through horse races, TDS will be feasible if the amount exceeds five thousand rupees.

No Expenditure/Deduction is permitted to such income

Under section 80 D or 80 C, no deduction is applicable from such kind of income. The income tax slab rate or benefit of general exemption limit is also not relevant to this remuneration. The total amount gained will be taxable at the direct rate of 30% (approximately).

Cases where prize money received in kind

If you have won a car as prize money, then the prize distributor shall make certain of it before releasing the prize that tax has been cleared. Tax is cleared as per the market value of the prize distribution. The prize distributor can either redeem from you or that person can take the issue of tax on himself/herself.

You have to know that, in cases where the prize is given to you in both kind and cash, the total tax will be calculated based on the cash part of the prize and on the market value of the kind.

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