TAX ON WINNINGS FROM TV REALITY SHOWS, GAMES, LOTTERIES ETC.

We do know the hefty amount of prize money being announced by some of the leading game shows like Big Boss, Kaun Banega Crorepati, Indian Idol, Dream 11, Rummy Circle Etc.

But, have you ever thought about the tax implications of the money won in such competitions?

Yeah. You are right!

The money won in such competitions is TAXABLE.

The income earned is taxable under the head “Income from Other sources”.

1. Section 194B of the Income Tax act 1961, requires TDS to be deducted for any income by way of winnings from any lottery or crossword puzzle or card game and other game of any sort. 

2. The rate of TDS is 30% plus applicable surcharge and cess.

3. TDS is required to be deducted only if the winning amount exceeds Rs. 10,000/-

Some of the transactions subject to TDS u/s 194B:

a)     Winnings from Lottery

b)     Winning of TV Reality shows

c)     Winnings from Online games

d)     Winnings from game shows.

So, any person paying money of any sort as mentioned above shall before making the payment ensure that TDS is deducted before making the payment and should remit the TDS so far deducted to the government.

Key points to be kept in mind, while filing the Income Tax Return

1)     The Taxpayers cannot claim the benefit of a basic exemption limit of Rs. 2,50,000/-

2)     The Income Tax slab is also not applicable to this income. The entire amount received is taxed at the rate in force i.e 31.20%

3)     No deduction under Chapter VI-A is allowed against such incomes.

4)     The refund of TDS deducted cannot be claimed by filing the income tax returns.

Let us understand this with an example.

Mr. A won Rs 10,00,000 from an online game Dream 11. The TDS u/s 194B on winnings of Rs 3,12,000/- shall be deducted.

So Mr. A will receive only Rs. 6,88,000/-.

Balance of Rs. 3,12,000/- will be remitted to government as tax which he neither can claim as refund nor claim any expenditure against such income.

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CA Sanjay R Shetty

+91 77602 52581