In this post, we will see about TDS Section 194B under Income Tax.
Here we will discuss in detail the topics given below:
If a person wins a lottery or online/TV game shows and receives the prize in cash or as an item then it is taxable under Income from other sources.
The flat tax rate under TDS Section 194B is 30%.
Deduction under section 80C or 80D or any other kind of deduction or allowance is not applied to this income. The basic exemption limit and income tax slab rate are also not applicable.
The organiser/distributor of the prize won will deduct the TDS, and they should only release the prize for the winner only after deducting TDS Section 194.
If the payment of the prize amount is made in instalments, the deduction will be made at the time of actual payment of each installment.
For instance, Srilakshmi won prize money of Rs 3 lakhs from a game show, and she has an interest income of Rs 5 lakhs per annum. Then her tax liability will be:
If the person responsible fails to deduct tax as per section 271C, then they need to pay a penalty equal to the amount of tax that has to be deducted.
As per section 276B, the deductor should deposit the tax deducted to the government. If not, it can lead to imprisonment for a minimum of 3 months to 7 years or a fine.
Note:
For example, the valuation to deduct tax if you get a holiday reward is based on how much it will cost a third party for the same.
With that, we have come to the end of this post.
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