Smart things to know about the tax implications of prize money
The earning from lottery, prizes in game shows, crossword competitions or races, which are in the nature of betting, attract income tax.
- If the winnings exceed Rs 10,000, tax is deducted at source, that is, before the payment is made. TDS is applicable irrespective of the amount being paid in cash or kind.
- Even if the amount paid in cash is not sufficient to meet the tax liability, one must ensure that the tax is paid fully with respect to the earnings before receiving it.
- In the case of winnings from a horse race, tax is deducted at source if the winnings exceed Rs 5,000.
- The rate of tax for any of the earnings from lottery, crossword, horse race or card games is a flat 30% with applicable surcharge.
- The income from winnings and prizes from these sources is not eligible for the basic tax exemption.
Source: Economic Times
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