Section 194B deals with deduction of TDS in case of Winning from Lottery or Crossword puzzles. Under Section 194B, any person responsible for paying any amount as winning from following will attract TDS and the payer has to deduct TDS @ 30% if such amount is in excess of Rs. 10,000;
- Winning from Lottery
- Winning from Crossword puzzle or
- Card games or
- Any other games
- TDS under this section will be deducted at the time of payment.
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. But if prizes are partly in cash and partly in kind, tax is deducted on the total value of the cash and kind from the cash. And, if the cash is insufficient to meet the TDS liability, either the winner or the prize distributor pays the deficit. This will depend entirely on the terms and conditions of prize scheme.
The payer should include the winning amount while filling income tax return under the head “Income from other sources” and calculate tax liability after taking credit of the TDS amount deducted from source.
Reference:
As Per Section 194B, of the Income Tax Act, 1961-
Winnings from lottery or crossword puzzle
- 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.