Taxability of Income from Lottery winning, Crossword Puzzles, TV Game Shows & Horse Racing
The income that a person earns through lotteries such as (Lottery winning, Crossword Puzzles, Horse Racing, etc.) are known as “Casual Income“. The taxes on casual income are paid on “Advance Basis“.
Most famous game shows like KBC, Dus ka Dum, etc. and numerous Reality Shows like Dance Plus, Indian Idol, etc. offer huge prizes in cash as well as in kind (i.e. in form of Cars, Houses, Jewellery, Appliances, etc.). This form of income earned is taxable and TDS is deducted before giving away lottery, game shows, talent shows income.
Applicability of TDS on Lottery winning and Prizes from Game shows :
If the Lottery Income or Prize money exceeds Rs. 10,000, then “the Lottery or Prize money distributor” will deduct TDS @ 31.2% (Tax @ 30% + Cess @ 4%) and then pay the winner the amount after deduction of TDS – As per Section 194B.
[TDS Will be deducted at the time of payment of Lottery amount or Prize money to the winner.]
In the case of winnings from Horse Races, TDS will be applicable if the amount exceeds Rs 10,000 @ 31.2% – As per Section 194BB.
[TDS Will be deducted at the time of payment amount to the winner.]
No Deduction/Expenditure is allowed from such income.
No deduction under section 80C or 80D or any other deduction/allowance is allowed from such income.
The Benefit of basic exemption limit and income tax slab rate is also not applicable to this income. The entire amount received will be taxable at the flat rate of 31.20%. Hence, No TDS on such incomes will be Refunded.
Taxability if Prize received in Kind (i.e. in the form of House, Cars, Bike, Appliances, Gold, etc.)
IF the prizes awarded are in kind, the prize distributor will, before releasing the prize, ensure that tax has been paid in respect of the winnings. It will either recover it from the winner or bear the tax liability itself and deposit TDS.
Note : In cases where the prize is given both in cash and kind, then the total tax should be calculated on the cash portion of the prize and on the market value of the prize given in kind. And the tax amount should be deducted while giving the cash portion of the prize to the winner. But if the cash prize is not sufficient to cover the total tax liability, then either the winner or prize distributor should pay the deficit.