Income tax returns (ITR) filing: Can prize money be taxed as income? Find out

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October 31, 2017 5:15 AM

Such prize money will be treated as income under Section 56 of the Income-tax Act and shall be classified as ‘Winning from Lotteries, etc.,’ Hence, U/S 115BB, such income shall be taxed at 30% (plus applicable surcharge and cess).

Income tax, ITR, ITR filing, Income Tax return, Income Tax returns filingSuch prize money will be treated as income under Section 56 of the Income-tax Act and shall be classified as ‘Winning from Lotteries, etc.,’ Hence, U/S 115BB, such income shall be taxed at 30% (plus applicable surcharge and cess).

My wife had got Rs 75,000 as prize money for winning a music competition. Will she have to pay tax on it?

– Vikas Sethi

Such prize money will be treated as income under Section 56 of the Income-tax Act and shall be classified as ‘Winning from Lotteries, etc.,’ Hence, U/S 115BB, such income shall be taxed at 30% (plus applicable surcharge and cess). However, this is also worth noting that the payer is supposed to deduct TDS on this amount on the same rate. Hence, it is possible that your wife will get this amount after deduction of this tax. It is advisable to take TDS certificate from the payer for such deduction as it would be required to claim it while filing the Income Tax Return.

Is it mandatory to link Aadhaar number with bank accounts?

—Gurmeet Singh

As prescribed in the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017, it is mandatory to link the Aadhaar card with the bank account. This has been clarified by the Reserve Bank of India in its press release dated October 21, 2017.

What is the difference between advance tax and self assessment tax?

—Bipul Kumar

The main difference is that advance tax is paid during the same financial year in which income is earned. It is usually paid in four instalments in a financial year where some specified percentage of estimated tax liability has to be paid, failing which interest @1% per month is charged on the amount short paid. Conversely, any tax paid for a financial year after the end of that financial year is self-assessment tax which is usually paid at the time of filing of income tax return.

My son will inherit a flat from his grandfather. Do I have to pay any tax on it as my son is a minor??

—SK Rao

Inheritance of property is not considered as a transfer of capital asset under the Income-tax Act, 1961. Since no income accrues to him now, you don’t need to pay any tax. However, if the property is sold and your son is minor at that time, then you will need to pay tax on that amount as per the prevailing law.

The writer is a partner, Ashok Maheshwary & Associates LLP. Send your queries to fepersonalfinance@expressindia.com

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