Instructions for deduction of tax at source from winnings from lottery or crossword puzzle or horse race during financial year 1986-87 at the rates specified in Part II of First Schedule to Finance Act, 1986
ANNEX I – EXTRACT FROM THE FINANCE ACT, 1986, SUB-PARAGRAPH I OF
PARAGRAPH A OF PART III OF FIRST SCHEDULE
Paragraph A
Sub-Paragraph I
In the case of every individual or Hindu undivided family or unregistered firm or other association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii ) of clause (31) of section 2 of the Income-tax Act, not being a case to which Sub-Paragraph II of this Paragraph or any other Paragraph of this part applies :—
Rates of income-tax
| (1) | where the total income does not exceed Rs. 18,000 | Nil; |
| (2) | where the total income exceeds Rs. 18,000 but does not exceed Rs. 25,000 | 25 per cent of the amount by which the total income exceeds Rs. 18,000; |
| (3) | where the total income exceeds Rs. 25,000 but does not exceed Rs. 50,000 | Rs. 1,750 plus 30 per cent of the amount by which the total income exceeds Rs. 25,000; |
| (4) | where the total income exceeds Rs. 50,000 but does not exceed Rs. 1,00,000 | Rs. 9,250 plus 40 per cent of the amount by which the total income exceeds Rs. 50,000; |
| (5) | where the total income exceeds Rs. 1,00,000 | Rs. 29,250 plus 50 per cent of the amount by which the total income exceeds Rs. 1,00,000. |
CLARIFICATION 2
- I am directed to refer to this Department’s Circular No. 467 [F. No. 275/69/86-IT(B)], dated 21-8-1986] [Clarification 1] on the above subject and to say that enquiries have been received from various quarters about the quantum of income by way of winnings from lottery/crossword puzzles/horse races that is exigible to the provisions relating to deduction of tax at source. The position is therefore, clarified as under :
(1) No tax shall be leviable in respect of winnings from lottery/crossword puzzles/horse races, where the amount received from such winnings together with any sum received as casual and non-recurring receipt in the aggregate does not exceed Rs. 5,000 in a year.
(2) Where such winnings exceeds Rs. 5,000, tax is to be deducted at source at the rate of 40 per cent on the gross winnings, after treating Rs. 5,000 as exempt under the provision of section 10(3), if such payment is made on or after 1-6-1986.
- The term “gross winnings” appearing herein means the payment received by the prize winner after deduction of the amount to be paid to commission agents.
Circular : No. 478 [F. No. 275/106/86-IT(B)], dated 14-1-1987.
