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Income Tax on TV Game Show Prize, Lottery, crossword puzzles, card games etc. TDS on prizes won cash or in kind and Refund of tax |Updated 21-05-2017|

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While Kaun Banega Caror-pati (KBC) -7 is back with jackpot of Rs. 70 million, I wonder how many of us remember the school-days fete when endlessly we used to try win piece of anything by throwing circles over it. Not to mention, I never succeeded any. Earlier in July 2000, Kaun Banega Caror-pati (KBC) set the theme for deluge of TV game shows to follow. Big Boss,S-a-r-e-g-a-m-a, Indian Idol and many more, these TV shows have brought good fortunes for many.

KBC Effect:

KBC not only won popularity but also gave rise to litigation with respect to taxability of prize money won in a game show like KBC where winning is wholly not dependent on chance but knowledge and skills of the contestant also plays a part in the winning.

Soon after launch of KBC in July, 2000, the Finance Act 2001 amended Income Tax Act, 1961 to widen the definition of income to include"card game and other game of any sort" in its definition.

An explanation was added to section 2(24)(ix) to define theterm lottery and games as under:

Lottery - "lottery includes winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever, under any scheme or arrangements by whatever named called."

Card game and other gameof any sort - includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or anyother similar game.

The term "card game and other game of any sort" thus now covers all kind of contest whether on Television or not where prize money is given to a winner selected among contestants.

It is notable to see that prizes won solely on draw of lots or by chance have been made to cover under the term "lottery" whereas prize money won in a contest not dependent solely on chance has been covered under the term "Card game and other game of any sort" .

Deduction of Tax at Source on prize won

Prizes won in Cash.

As per section 194B of Income Tax Act, 1961, if the prize money is more than Rs. 10000/- (Ten Thousand Rupees) TDS shall be deducted. TDS rate prescribed is 30%. Thus if you win Rs. 1 lakhs in a game show, you will receive net Rs. 70 thousand after deducted of tax Rs. 30000/-

Prizes won in kind .

As per section 194B of Income Tax Act, 1961, if the prize money is not in cash but in kind (Say you won a car) or partly in cash or party in kind then the receiver of the prize is required to deposit the tax calculated @ 30% of the aggregate value of the prize.

Refund of Tax Deducted on Prize
Income tax deducted on prize money is not refundable. Taxation of prize money is governed by the Chapter XII of Income Tax Act, 1961 which deals with determination of tax in certain special cases.

As per section 115BB the total income tax payable by a person who is in receipt of a winning from lottery orgame etc. shall be the aggregate of the following:

(a) Income Tax @ 30% on the winnings from lottery/game etc.
(b) Income tax on his rest of income as if there were no such winnings

Example:
Mr. ABC won Rs. 500000/- in a TV Game Show but he received Rs.3,50,000/- after deduction of Tax at source. His other income from salaries and interest is Rs. 350000/- and he is entitled to a deduction of Rs. 100000/- under section 80C.

His income tax obligation for Assessment Year 2017-18 shall be as under:

Computation of Income and Tax
1	Income from Salaries+Interest		350000.00
2	Income from other sources		500000.00
3	Gross Total Income (1+2)		850000.00
4	Deduction under Section 80C		100000.00
5	Total Income (3-4)		750000.00
6	Income Tax:
6.1	Income Tax on TV winnings	150000.00
6.2	Income Tax on rest of Income (Rs. 3.50 lacs minus Rs. 1 lacs)	0.00	150000.00
7	Education and SHE Cess		4500.00
8	Gross Tax Liability		154500.00
9	Less: Tax Deducted at Source		150000.00
10	Amount of Tax Payable		4500.00