Rate of TDS on winning from Gambling, Lotteries, Prize Award Money under section 194B of the Income Tax Act

Rate of TDS on winning from Gambling, Lotteries, Prize Award Money under section 194B of the Income Tax Act is 30% on any winning of more than Rs 10000/-(Ten Thousand Rupees).

NATURE OF PAYMENT

Winning from lotteries, crossword puzzles, card games and other games of any sort. For this purpose, “Lottery” includes winning from prizes awarded to any person by draw of lots or by cheque in any other manner whatsoever, under any scheme or arrangement by whatever name called. Further the expression “Card game and other game of any sort” includes any game show, any entertainment programme on television r electronic mode in which people complete to win prizes or any other similar game.

Deduction at what time?

Tax is to be deducted at the time of making payment. Thus if the prize is paid in installments, the deduction of tax shall be made at the time of each installment. (However keep in mind that the exemption limit of Rs.10000/- is per winning and not per payment).

Prize in kind :

If the winnings are wholly in kind or partly in kind but the part is cash is not sufficient to meet the TDS liability, the payer shall before releasing the winning, ensure that the tax has been paid by the payee.

Reference: Section 194B of the Income Tax Act, 1961

Winnings from lottery or crossword puzzle.

194B. The person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle or card game and other game of any sort] in an amount exceeding ten thousand rupees shall, at the time of payment thereof, deduct income-tax thereon at the rates in force :

Provided that in a case where the winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings.

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