Winners Don’t Take It All... Only 70 Per Cent!

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: Shopping plazas and supermarkets are attracting customers by enticing them with gifts and prizes. You may turn out to be a lucky winner and so will the tax department. The reason is that any winning, whether in cash, kind or in the form of any article or even immovable property, is treated as income if it happens to be a winning from a game of any sort. Such winnings from games would include winnings from any game show, an entertainment programme on television or electronic mode in which people compete to win prizes, or any other similar game.

Winnings from lotteries are also covered, which include prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever under any scheme or arrangement by whatever name called. Winnings from crossword puzzles and races including horse races or from gambling or betting of any form or nature whatsoever are also included in the definition of income so as to make you pay tax thereon.

Even if your income is only from this source, being a student or housewife, the entire amount of winning from the aforesaid source is fully taxable at a flat rate of 30 per cent. In other words, there is no initial exemption or lower rates of taxes applicable on the basis of slabs of income as in the case of other sources of income. When you win a prize, lottery, asset, etc. as a windfall, such amount, though a capital receipt, is deemed to be income under Section 2(24) by a fiction of law and the full amount is liable to tax at the maximum marginal rate under Section 115-BB. In other words, you keep 70 per cent of the value of such prize and the Government gets 30 per cent thereof. This is one case where it is “win-win” for both the tax-payer and the tax department!