Everything you need to know about the tax rules for winning game shows and the winning lottery
Online games, which include first-person games, strategy games, multiplayer role-playing games, and more, are widely available on digital gaming systems such as PCs, consoles, and smartphones. Evergreen TV shows such as quizzes, dancing, games, singing competitions, fantasy sports or any other activity provide winners with attractive prizes. And given the fruitful earnings, you should be aware of the tax implications of such earnings which we will discuss here.
Income from online games is taxed under Section 115BB of the Income Tax Act. When submitting tax returns, this is classified as “Income from other sources”. Winnings from lotteries, crossword puzzles, races, card games, betting, gambling and other games are also included. Accordingly, winnings from online games are included in this section. First of all, let me say unequivocally that Articles 115 BB and 194B all refer to the taxation of income from any game. Second. 115 BB is a clause that explains the relevant tax rate, while Sec. 194 B explains the rules for TDS and when a taxpayer is required to deduct TDS. Section 194B of the Income Tax Act requires that any gain over Rs 10,000 be subject to a TDS of 30%.
The effective rate will be 31.2% after termination and surcharge. The company or organization transferring the award money is supposed to subtract this TDS. Players should be aware that any winnings for which TDS are withheld should always be recorded in their tax returns. The gaming companies keep the PAN of the player as well as the bank details; however, the role of the player does not end there. Disclosure of such income will be required when filing player tax returns. Players who have submitted their PAN card will also receive a TDS certificate. The withholding tax deduction for fantasy sports companies will be recorded in form 26AS. In most cases, taxpayers are entitled to a tax refund if the TDS portion exceeds their taxable income for a given fiscal year. In addition, taxpayers cannot claim a refund of this TDS amount in the event of such gains.
Regardless of the deductions to which you are entitled, you will be charged a TDS of 30%. The recipient must pay a 31.2 percent TDS on any gifts won in the form of a prize or winning prize before taking possession of any such gift. For example, if you win a car worth Rs 3.00,000 in a raffle, you will have to pay a TDS of 31.2%, or Rs93,600, on the car. If the winning entrant receives money in the form of check, cash, DD (sight draft) or online transfer, for example, payment will be made after deducting taxes at the applicable rate.
For investment related articles, economic news and mutual fund advice