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Tds on car prize

Shivani (Learner) (1881 Points)

08 July 2016

Dear Friends

Mr. X wins a car prize of Rs. 700000.

Now the prize is totally in kind.

There is a TDS requirement under section 194B of 30%.

Prize giver needs to collect Rs. 210000 as TDS from X and deposit with Government.

If X does not give Prize giver 210000 then Prize giver needs to deposit it from his own pocket.

My question is whats the procedure, which challan is involved?

and can X claim the TDS when filing his return.

How will X claim it in case where Prize giver has paid out of his pocket? Can he at all claim TDS in that case?

Please reply at earliest or u can whats app me.

regards

Shivani

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9 Replies

Dinesh Mertiya (PROFESSIONAL) (761 Points)
Replied 08 July 2016

TDS deducted u/s 194B is not refundable , which is 30% of prize amount (Rs. 2,10,000)

Dinesh Mertiya (PROFESSIONAL) (761 Points)
Replied 08 July 2016

person making payment is responsiable for tax deduction at source in respect of whole amount of winnings.

the person shall, before releasing the winnings either in cash or kind ensure that tax has been paid in respect of winnings

Dinesh Mertiya (PROFESSIONAL) (761 Points)
Replied 08 July 2016

CHALLAN
NO./ ITNS 281

CA Hariprasad Nayak (Chartered Accountant) (221 Points)
Replied 08 July 2016

The payer of the prize has to ensure that TDS amount is recovered from the winner of the prize. It is true that prize payer has to bear the TDS if the same is not recovered from the winner. Grossing up needs to be done to determine the value of the prize.

However, once he bears the same there is no way he can claim the same back. Only winner of the prize will be able to claim the tax credit at the time of his filing the return of income.

Hope the aboce clarifies.

Regards,

CA Hariprasad Nayak

+91 9481 227 467

2 Like

Shivani (Learner) (1881 Points)
Replied 09 July 2016

Dear Hariprasad Sir

I contemplate the following scenarios in this problem:

Case 1: Prize giver recovers the TDS from the winner Mr. X

Car Value Rs. 7 lakhs

TDS recovered Rs. 210000

TDS deposited by Prize Giver by way of TDS Challan Rs. 210000

Mr. X will show Rs. 7 lakh as income under the head IFOS in his ITR and claim Rs. 210000 as TDS from his final income tax liability.

Case 2: Prize giver unable to recover TDS from the winner Mr. X and pays out of his pocket

Car Value (grossed up) Rs. 10 lakhs [i.e. 700000/(1-0.30)]

TDS amount Rs. 3 lakh

TDS deposited by Prize Giver by way of which challan?

Mr. X will show how much income under the head IFOS in his ITR?

Will Mr. X claim any TDS in his ITR?

Will Prize Giver show Rs. 3 lakh as his expense in his PL Account?

Please point out anything I wrote wrong and answer the questions in Case 2.

Regards

Shivani

1 Like

Dinesh Mertiya (PROFESSIONAL) (761 Points)
Replied 09 July 2016

in case 1

all facts in case 1 is practical as well as according to income tax act.

Dinesh Mertiya (PROFESSIONAL) (761 Points)
Replied 09 July 2016

Case 2: Prize giver unable to recover TDS from the winner Mr. X and pays out of his pocket.

as explained above

Car Value (grossed up) Rs. 10 lakhs [i.e. 700000/(1-0.30)] TDS amount Rs. 3 lakh TDS deposited by Prize Giver by way of which challan?

Challan 281

Mr. X will show how much income under the head IFOS in his ITR? Will Mr. X claim any TDS in his ITR? Will Prize Giver show Rs. 3 lakh as his expense in his PL Account?
X will show income of Rs. 10,00,000 and can claim TDS in his ITR,

which is not refundable

Rs. 10,00,000 is allowable expenses and can show in his profit and loss account

1 Like

Minesh Rawat (Article) (199 Points)
Replied 09 July 2016

practically it is better to recover tds from the prize winner and deposit the same to Govt so prize winner will claim the same while filing return of income....