Income Tax On Competition And Lottery Winnings: Going to file income tax return for the financial year 2024-25. So keep in mind that income from competitions or lotteries is also taxed. If you have won a cash prize from any competition or lottery, that income also comes under the ambit of income tax. Heavy taxes have to be paid on this income.
Income Tax On Competition And Lottery Winnings: The time has come to file income tax returns for the financial year 2024-25 and its last date is 31 July 2024. While many people are looking for ways to save their income tax, many taxpayers are busy calculating their tax liability. When you file income tax return, it is important that you add up the income from all sources. Be it income from investments, mutual fund returns, savings account returns etc. If you have won a cash prize from any competition or lottery, that income also comes under the ambit of income tax.
Income tax on cash prizes from contests, lottery winnings
If you have ever wondered how lucky a person is if he has won such a huge cash prize from a competition or lottery, he has money in his hands. But please note that you cannot take the entire winning amount home. The remaining amount after paying tax will be yours. In India, any winnings from game show, reality and lottery winners are subject to tax, which is called Tax Deducted at Source (TDS). Such winnings are taxable at a flat rate of 30 per cent without any basic exemption limit. In such a case, Tax at Source (TDS) is deducted on the prize money and only the remaining amount is paid.
Act changed in 2001
Please note that taxable ‘income from other sources’ is defined under section 56(2)(IB) of the Income Tax Act 1961. The definition of tax-related sports was changed by the Finance Act of 2001 to cover TV and electronic (online) gaming formats after Kaun Banega Crorepati (KBC), a popular game show, was launched in the year 2000.
This income is within the scope of 30 percent TDS.
Any winnings from these listed sources are subject to 30 percent TDS under Section 194B of the Income Tax Act. Lucky draws and lotteries, crossword puzzles, racing, TV competition shows, electronic game shows, playing cards, betting and gambling. All these come under the purview of 30 percent tax.
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