Section 194B deals with deduction of TDS in the case of winning from lottery or crossword puzzles and section 194BB is for TDS deduction in case of winning from horse races.
Under section 194B, any person responsible for paying any amount as winning from followings will attract Tax at Source and the payer has to deduct TDS at the rate of 30% if such amount is in excess of Rs. 10, 000;
- Winning from lottery; or
- Winning from crossword puzzle; or
- Card games; or
- Any other games
TDS under section 194B has to be deducted at the time of payment. Unlike in other sections Tax to be Deducted at Source should not be deducted at the time of credit of such amount.
If the winning is in kind or partly in kind and partly in cash and such amount is not sufficient for deduction of TDS then the payer responsible for paying such winning amount should ensure that Tax at Source has been deducted and paid prior to handing over the prize to the winner. Proof of Tax Deduction at Source remittance should be handed over to the payee. The payer can also recover the tax amount from the winner before handing over the prize.
The payer should include the winning amount while filling income tax return under the head “income from other sources” and calculate tax liability after taking credit of the TDS amount deducted from source.
Any person, being a bookmaker or a person to whom a licence has been granted by the Government under any law for horse racing in any race course or for arranging for wagering or betting in any race course, who is responsible for paying to any person any income by way of winnings from any horse race in an amount exceeding Rs. 5000 shall, at the time of payment thereof, deduct TDS at the rate of 30%.
Finance bill of budget 2016-17 proposed to increase the limit of Rs 5000 as allowed under section 194BB to Rs 10, 000 with effect from the 1st day of June, 2016.