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Who will become a crorepati tax: Becoming the winner of one of the biggest reality shows in the country, Kaun Banega Crorepati (KBC), is no less than a dream come true. But do you know that a huge tax is levied on the prize money won here based on your knowledge. The tax levied on the prize money won in KBC includes flat tax rate, TDS and additional charges like surcharge and cess.
Winnings from game shows are subject to taxation
In India, the amount won from KBC or any other similar game show is taxed under the Income Tax Act. CA Dr. Suresh Surana gave important information related to tax on the amount won in KBC and told how much tax is deducted from the prize money of Kaun Banega Crorepati.
How much tax do KBC winners pay on their winnings?
Flat tax rate: Section 115BB of the Income Tax Act, 1961 provides that any amount won from any lottery or crossword puzzle or race including horse race (not being income from the activity of ownership and maintenance of riding horses) or card games and other games of any kind or from gambling or betting in any form or nature shall be taxed at the rate of 30%.
This section taxes income from games that depend on chance or luck rather than skill. Games like gambling fall under the purview of section 115BB.
Surcharge and Cess
This amount will be taxed at 30 per cent, plus applicable surcharge and cess. Taxpayers cannot claim basic exemption for these winnings and the income will be taxed at the specified rate without any deductions or exemptions.
Section 194B
As per section 194B of the Income Tax Act, the payer is required to deduct TDS at the rate of 30% (plus applicable surcharge and cess) on any such winnings if the amount exceeds Rs 10,000 in a particular financial year. Thus, the amount received by the taxpayer will be net of such TDS. To deduct such TDS, the payer may ask for the PAN and bank details of the winner.
The amount of TDS deducted by the payer will be shown in Form 26AS of the winner or taxpayer and credit of the same can be taken by the taxpayer while filing income tax return.
Are there slabs for different amounts?
The amount won from KBC will be taxed at the rate of 30% (plus applicable surcharge and cess). There is no prescribed slab for taxation of income falling under the purview of section 115BB in case of amount won through KBC.
Will winners have to pay income tax?
TDS deducted at the rate of 30% on winnings is considered as prepayment of income tax. This amount is credited to the total tax liability of the winner. Winners must disclose their winnings and the TDS deducted in their income tax returns. They must include the prize money under the head “Income from other sources”. The TDS deducted and shown in Form 26AS (which contains details of TDS collected and deposited) can be claimed as a credit against the total tax liability while filing returns.
Some important points
- No basic exemption limit: The basic exemption limit does not apply to the winning income. The entire amount is taxable.
- Filing tax returns: You need to disclose the winning amount while filing your income tax returns and pay additional tax liability, if applicable.
- No deduction allowed: No deduction is allowed under Chapter VI-A (like section 80C) against such income.
This taxation applies to all winnings from lotteries, game shows, and similar sources.