Income tax is a tax that is levied by the Government of India on the income of every individual or entity. The Income-tax Act, 1961 governs the provisions related to income tax in India. Anyone earning an income, whether a natural or artificial person, is liable to pay income tax unless exempted by law.
If you are lucky enough to win a lottery or prize money in a competition in India, it is important to know that the winnings are subject to tax. The tax rate on such winnings is a flat rate of 30%, and this applies to both resident and non-resident winners. It is essential to remember that the organisation giving out the prizes or lottery winnings deducts the tax at source, and you will receive the money after subtracting the tax at the appropriate rate.
The TDS on lottery winnings, card game winnings, TV programme winnings, crossword puzzle winnings, and other game winnings are covered in Section 194B of the Indian Income Tax Act, 1961. Before paying the winner, the payer must first deduct TDS at a rate of 30% if the rewards are more than Rs. 10,000. Additionally, the relevant TDS rises to 31.2% after surcharge and cess are added.
It's very important to pay the necessary taxes on lottery or prize money winnings in order to prevent fines and other legal repercussions. Such gains are subject to taxation under the "Income from Other Sources" heading. Taxes that are due must be paid, or else fines and legal repercussions may result. As a result, it is advised that you seek advice on your particular circumstance from a qualified tax professional.
Three methods are used by the government to collect income tax: taxes deducted at source (TDS) from the income of the recipient; taxes gathered at source (TCS); and voluntary payments made by taxpayers into different designated Banks, such as Advance Tax and Self Assessment Tax. Every individual who earns money has a constitutional duty to accurately calculate their income and pay taxes.
Read more: Government increases circle rates in Gurugram, making property registry costlier for home buyers in 2023
