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Lucky draw income which itr form?

J S BHAVSAR (CONSULTING) (1288 Points)

29 May 2017

Most FM radio stations run lucky draw events where cash payments are made. If a person has no salary income, only interest income and has earned lucky draw income, which form? Most lucky draw payments come with 30 percent TDS.

Can the lucky draw income be reported as "Income from Other Sources" in ITR1 in above case?

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16 Replies

Poltu Ghosh (Job) (1865 Points)
Replied 29 May 2017

you are correct

J S BHAVSAR (CONSULTING) (1288 Points)
Replied 30 May 2017

I have doubt. I read somewhere following.

ITR -1 Form is a simplified one page form for individuals having income upto Rs 50 lakhs from the following sources :

Income from Salary/Pension
Income from One House Property (excluding cases where loss is brought forward from previous years)
Income from Other Sources (excluding winning from Lottery and Income from Race Horses)

Can winning a lucky draw competition from a FM Radio Station termed as a lottery income?

J S BHAVSAR (CONSULTING) (1288 Points)
Replied 20 June 2017

Q: Can winning a lucky draw competition money from FM Radio Station get termed as a lottery income?

Poltu Ghosh (Job) (1865 Points)
Replied 20 June 2017

Thank you correcting me. You have to file ITR 2 and not ITR 1.

Poltu Ghosh (Job) (1865 Points)
Replied 20 June 2017

Yes it's a lottery income. Please refer section 2 (24) (ix) of the IT Act

J S BHAVSAR (CONSULTING) (1288 Points)
Replied 21 June 2017

Several radio listeners send SMS to radio station to register themselves as participants. Radio station calls the mobile numbers and asks some questions and only few lucky winners get the first prize by cheque those who answer the question correct.

This clearly amounts to "luck" and "only lucky people getting a win". Thus it would be termed Lottery income but then lottery income is coming under "Schedule OS" in ITR2.

entry under "5BB Winning from lotteries, crossword puzzles etc"

Is that the right option to enter the lucky draw cash prize amount in ITR2?

Now,

What would happen if this income is shown as "Income from Other Sources" in ITR1?

Would the tax department object to such filing?

As such even in ITR2, such income is getting entered in "Schedule OS". Assessee has only interest income and lucky draw income which fall under income from other sources in ITR2.

Poltu Ghosh (Job) (1865 Points)
Replied 21 June 2017

Winnings from lottery is taxed at special rate of tax @ 30% u/s 115BB. So if ou fill it in ITR 1 it will be taxed at Normal rate of tax. If you full fill it at ITR 2 in the relevant field it will be taxed at 30%. So you have to use ITR 2 and it will be wrong to show in ITR 1. Also note no expenses etc are allowed from such income. No benefit of basic exemption limit. Entire TDS will match with your tax liability and thus no refund.

Poltu Ghosh (Job) (1865 Points)
Replied 21 June 2017

If you fill the same in ITR 1 it will amount to tax evasion. Department will come to know to this fact from the TDS return filed by the deductor. The deductor might have filed the TDS return with the relevant section code applicable for winnings from lottery. TDS is applicable if amount paid excess Rs 10000. If tax was deducted then you may face problem in future. If there is no TDS then you may escape.

J S BHAVSAR (CONSULTING) (1288 Points)
Replied 22 June 2017

There is TDS deducted 30% by the deductor. The Section under which the TDS was deducted is 194B - Winning from lottery or crossword puzzle.

It means ITR2 becomes applicable now, thanks for guiding me properly.

In Schedule OS of ITR2, where do we enter the lottery amount?

Poltu Ghosh (Job) (1865 Points)
Replied 22 June 2017

ITR 2 Schedule OS Sl. No. 1 (f)(i)

J S BHAVSAR (CONSULTING) (1288 Points)
Replied 22 June 2017

Actually this lottery income is to be clubbed with interest income and home tuition income.

Then ITR3?

In ITR3, what to choose for "Nature of Business" for irregular home tuitions for nearby kids?

There is no item to choose in drop down. Where can such income be shown. Nor there is a list of students available, nor the income is fixed or regular. Such income remains "irregular cash".

J S BHAVSAR (CONSULTING) (1288 Points)
Replied 22 June 2017

Originally posted by : Poltu Ghosh
	ITR 2 Schedule OS Sl. No. 1 (f)(i)

Actually that section SI No.1 (f)(i) is not editable field.

SI No. 1 d(1) is editable field saying "5B - Winnings from lotteries and puzzles"

Poltu Ghosh (Job) (1865 Points)
Replied 22 June 2017

I cannot say much in ITR 2 since not gone through but there must be some field to fill the figure. If it's 1 d (1) then fill there.

Poltu Ghosh (Job) (1865 Points)
Replied 22 June 2017

Interest income and tuition income are to be reported as Income from other sources. No need to use ITR 3. These two income will be taxed at Normal rates. Report these in Schedule OS of ITR 2.