Lottery winning

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 March 2018 Case study:

A: Non resident, citizen of India. Settled in UK for past 8 years and resident of UK(but not citizen of UK). 34 years old
B: Resident and citizen of India. 36 years old

If A wins 100 crores in UK lottery and pays mandatory tax of 40%, and shares his 50% income with his Indian friend B (i.e., 50% of 60 crores after UK tax deduction)= 30 crores. The transfer of money is made from UK account of A to Indian bank account of B.

Query:
1) Now does B has to pay 30% slab rate on 30 crores again, though it has already suffered tax in UK?
2) If B is subject to tax again, what are the possible deductions and exemption he can claim.
3) If A brings money to India and deposits in his Indian bank account and transfers to B, can the case bring any change and possible deductions in B's 30 crores.

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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31 March 2018 A is a non resident whereas B is a resident.

1. Yes, B has to pay. It doesn't matter that the amount has already been subjected to Tax in the hands of A. THis is because A has gifted his friend B and such gift is fully taxable in the hands of the receiver.

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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31 March 2018 2. B will be assessed to tax for the gift received as mentioned above. The regular deductions and exemptions will be available for B

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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31 March 2018 3. Even if the amount is first brought to A's NRE account here and then transferred to his friend B, the transaction will be assessed to Income tax as a gift income as mentioned above.

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