Table of Contents
1. Section 194G of the Income Tax Act, 1961
Section 194G contains provisions relating to TDS on payment of lottery commission, remuneration or prize.
2. Who should deduct tax under this section?
TDS will be deducted by the person who is paying any income in the form of commission, remuneration or prize on lottery tickets to any person who has been stocking, distributing purchasing or selling lottery tickets.
3. What is the maximum limit upto which no tax needs to be deducted under this section?
No tax needs to be deducted it the amount of commission or remuneration paid does not exceed Rs. 15,000 in the financial year.
4. What is the rate at which tax shall be deducted under this section?
- Tax will be deducted at the rate of 5% at the time of credit of such income to the account of the payee or at the time of payment of such income, whichever is earlier.
- In cases where PAN is not furnished by the payee, the rate of TDS shall be 20%.
- No surcharge or cess shall be leviable over and above the 5%.
5. Is there any conflict between sections 194B and 194G of the Income Tax Act?
- Section 194B contains provisions relating to TDS on winnings from lottery, crossword puzzles etc
- Section 194G deals with TDS on of payment of lottery commission, remuneration or prize.
- Though both the sections deal with winnings from lottery, the main point of difference is the nature of payment and the person to whom the payment is made.
- Tax has to be deducted under 194G if the person earning commission or reward is a person who has been stocking, distributing purchasing or selling lottery tickets. (i.e. a lottery ticket selling or purchasing agent).
- However, if a lottery ticket selling agent wins any reward from the ticket he purchased for himself will be taxed under section 194B instead of 194G.