1764. Instructions for deduction of tax at source from winnings from horse race during financial year 1980-81 at the rates speci­fied in Part II of First Schedule to Finance (No. 2) Act, 1980

1. Section 194BB enjoins on any person, being a book-maker or a person to whom a licence has been granted by the Government under any law for the time being in force for horse racing in any race course and who is responsible for paying to any person any income by way of winnings from any horse race in an amount exceeding Rs. 2,500, to deduct income-tax thereon, at the rates in force, at the time of payment thereof.

2. The rates are prescribed by the Finance Act of the relevant year. The Finance (No. 2) Act, 1980 has prescribed the rates for deduction of tax at source for the financial year 1980-81 as specified in Part II of the First Schedule to the said Act. They are as in table given below :

Rates of income-tax including surcharge
I. In the case of a person other than a company—
(a) where the person is resident
33 per cent (IT 30 per cent + SC 3 per cent);
(b) where the person is not resident
33 per cent (IT 30 per cent + SC 3 per cent);
income-tax and surcharge on income-tax in respect of the income at the rates prescribed in Sub-Paragraph I of Paragraph A of Part III of the First Schedule to the Finance (No. 2) Act, 1980, if such income had been the total income,
whichever is higher.
II. In the case of a company—
(a) where the company is a domestic company
23 per cent (IT 21.5 per cent + SC 1.5 per cent);
(b) where the company is not a domestic company
75.25 per cent (IT 70 per cent + SC 5.25 per cent).

3. It is requested that the deduction of tax at source from the payments made after June 18, 1980 of income by way of winnings from any horse race may be made during the financial year 1980-81 according to the above rates. If any deduction has already been made according to the rates prescribed in the Finance Act, 1980, adjustment therefor may not be made.

4. The tax deducted should be paid to the credit of the Central Government by remitting it into the government treasury or the office of the Reserve Bank of India or State Bank of India or any other authorised public sector bank within one week from the last day of the month in which the deduction is made. While making the payment of tax deducted at source to the credit of the Central Government, it may please be ensured that the correct amount of income-tax and surcharge is recorded in the relevant challan. It may also be ensured that the right type of challan is used. New colour band challans are being introduced with separate numbers. The relevant challan for making payment of tax deducted at source from pay­ments by way of winnings from horse races made to the company-assessees is No. 2 with “Red Colour Band” and in respect of pay­ments made to non-company-assessees is No. 8 with “Blue Colour Band”. Along with these colour band challans the old challan forms will continue to be used. The old challan forms are No. ITNS 39A for payments to company-assessees and ITNS 39 for pay­ments to non-company-assessees.

5. Attention is also invited to section 276B wherein it is pro­vided that if a person without reasonable cause or excuse fails to deduct, or after deducting fails to pay the tax as required under the provisions of Chapter XVII-B, he shall be punishable—

     (i)   in a case where the amount of tax which he has failed to deduct or pay exceeds Rs. 1,00,000, with rigor­ous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; and

    (ii)   in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine.

6. These instructions are not exhaustive and are issued only with a view to helping those responsible for making deductions of tax under this section. Whenever there is a difference of opinion, a reference should always be made to the provisions of the Act, and the relevant Finance Act through which the changes in the tax structure are made.

7. In case any assistance is required, the Income-tax Officer concerned or the local Public Relations Officer of the Income-tax Department may be approached for the same, who will, if neces­sary, obtain the orders of higher authorities in the matter.

Circular: No. 280 [F. No. 275/19/80-IT(B)], dated 20-9-1980.

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