When you see people winning 3,20,000 on KBC or when you win big on Dream 11 you might be having a wonderful feeling that you have won this money without investing much and you only won this based on your knowledge and skills and now you can use this whole money without any deduction as you want but wait…..because the money earned without investing any amount or without spending a single penny comes with a huge tax. So in this post let’s talk about the tax you need to pay when you earn a jackpot on KBC or Dream 11.
TDS deducted @30% u/s 194B of the Income Tax Act:
Whenever you win any amount in any such gameshows above ₹ 10,000 always remember that you will only receive 70% of that amount and as soon as you win only 70% of the amount will be transferred to your account after depositing the TDS amount to your PAN. So whatever you see in a gameshow that the amount is getting transferred that is just for the television actual amount is transferred after deducting the TDS.
In some cases you might even win a car or two wheeler in that case you will have to first give 30% of the value of such vehicle in money form to the person giving you lottery, he will deposit that amount with government and then distribute the gift to you.
So the website owners running such game on their websites where they distribute money to people must always ask for PAN cards of the winner who win big and must distribute money only once TDS has been deducted properly or they might land into a problem with Income tax department where they might have to pay interest and penalty for not deducting TDS.
Now people would wonder that this is the only tax we need to pay and we might save some tax by investing in LIC or medical insurance:
After winning KBC or lottery and paying TDS you might think that yes now atleast you can use all the money peacefully for whatever needs to you want and you might be also thinking that I would save some tax because of slab benefits and also I would invest in LIC, PPF to claim deduction in section 80C, but wait… you need to pay tax on such winning @30% u/s 115BB and you can’t get benefit of slab or you can’t even claim deduction under Chapter VI A i.e. by investing in LIC or PPF, against such income also you can claim set off of any loss against such income. People earning lottery might be lucky but when it comes to tax they are unlucky because they will always pay more tax then other person earning same income. Also filing a tax return is compulsory even when your other income is below the threshold limit i.e. 2.5 lakh or your winning is below 2.5 lakh because you need to pay cess on such income @4% of tax amount and along with it you also need to pay surcharge in some cases where you earn big i.e. above ₹ 50 lakh.
Now the last question which remains is which ITR to file to declare such income and where to declare such income in Income tax return:
The very simple answer to this question is you need to declare such income in ITR 2 if you don’t have business income or use ITR 3 if you earn any business I.e. you can’t use ITR 1 or 4 to declare such income and in ITR 2 or 3 you need to declare such income in the schedule OS I.e. other sources income and in that schedule declare income under Income chargeable at special rate: “Winnings from lotteries, crossword puzzles etc. chargeable u/s 115BB”.
Hope this article clears all your doubts with regard to income from KBC, Dream 11, lottery etc.
If you have any further question or suggestion you can comment below or directly right to us.
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What do you want to know?
If your query is very specific we would request you to book consultation with our expert at: https://www.taxontips.com/tax-notice-personal-consultation/
One of my clients won 150000 amount on which TDS WAS cut from dream 11 . But he also has suffered a loss of more than 2lakhs can he set off this loss against winnings
Technically he should not pay tax but as of now by combine reading of section 70 and 115BB it just says tax needs to be paid on winning and no specific deduction allowed for loss. Further, when you will file return your total income would be compared with income in Form 26AS and then you will have to provide reason for such difference.
Hence, it’s your decision whether you wish to take that risk or not.
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