Introduction-
Income from Lottery, Crossword Puzzles, Games show, Race Horses etc. will be taxable under the head “Income from Other Sources”. The amount of Income from the said activities is taxable @ 30% + Surcharge @ 10% of income tax, where income is between Rs. 50 lakhs and Rs.1 crore or 15% of income tax, where income exceeds Rs.1 crore. + Ed. Cess @ 4% (w.e.f. 01.04.2018 onwards).
No Deduction Allowed-
The Basic Exemption limit is not applicable on such Income.
- No Deduction in respect of section 80 is allowed, say deduction u/s 80C to 80U are not allowed.
- No expenses are allowed against such Income.
Aplicability of TDS-
TDS will be deducted @30% + Surcharge @ 10% of Income Tax (if income is between Rs. 50 lakh to Rs. 1 Crore) or 15% of Income Tax (if income is above Rs. 1 Crore) + Ed. Cess @ 4% (w.e.f. 01.04.2018),applicable on such income,
If the amount exceeds Rs. 10,000, under section 194 (B), TDS will be deducted at the time of distribution of income.
If any prize is the nature of in kind, say Car, Television etc. Tax will be paid on market value of the gift prize, whether it is paid by winner or prize sponsor.
For Example1-
Mr .X win cash Prize of Rs. 5,00,000 from lottery tickets on 27.06.2018. What will be the TDS amount?
Answer-
TDS of Rs. 1,50,000 (i.e. 30% of Rs. 5,00,000) + Ed. Cess of Rs. 6,000 (i.e. 4% of Rs. 1,50,000) total of Rs. 1,56,000 will be deducted from prize amount and balance amount will be paid to the winner.
For Example2-
Mr .X wins a Car, on 27.06.2018. The Market value of the Car is 7,00,000. What will be the TDS amount?
Answer-
TDS of RS.2,10,000 (i.e. 30% of Rs.7,00,000) + Ed. Cess of Rs.8,400 (i.e. 4% of Rs. 2,10,000) total of Rs. 2,18,400 will be paid either by Mr. X or sponsor of Gift.