Regarding Hackathon Prize W-8BEN Form Tax Treaty Benefit & 115BB/115BBJ
This query is : Resolved
26 July 2025
I am an Indian resident. I recently won an online hackathon from a US based company. The challenge was to build an AI based software project using the company's AI offerings. The top 3 projects of hackathon were awarded prize money based on innovation, completeness, usability and efficiency of the project.
The US based company is asking me to fill W-8BEN form which has a tax treaty benefit section, not filling it would lead US company to withhold 30% tax by default. Which Article of India-US tax treaty is applicable here so that tax treaty benefit can be availed leading to minimum/no tax withholding by the US company?
Article 15- Independent Personal/Professional Services (includes software development services)
Article 23 (Para 1 & 3)- Other Income
The next consideration is- what would be the domestic tax treatment of the amount in India?
Possible relevant sections to explore to ensure compliance: Section 2(24), Section 115BB, Section 115BBJ.
Section 2(24) states that "card game and other game of any sort" includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game.
This includes skill based shows like Indian Idol and Dance India Dance. KBC is also clearly a game show and included in this. But a hackathon isn't an entertainment programme, a game show or a game.
Section 115BB also relates to winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever.
Section 115BBJ specifically relates to and overrides 115BB for "online games”, defining them as games that are offered on the internet and are accessible by a user through a computer resource, and includes games of skill or chance or both.
This is widely construed to be encompassing games such as rummy, poker and fantasy sports etc.
Indian tax law leaves the interpretation of a game to common sense and doesn't formally define it. Hackathon isn't a game but an innovation challenge with a software deliverable/demo. It is an intellectual/technical competition. There is no wagering, gambling, or speculative element. The result is based on skill, coding, innovation, and judged by a panel, not algorithms or randomness.
What would be the right tax treatment/classification of this income for W-8BEN form's tax treaty section and domestic (Indian) filing?
For India, would this be added to total income and taxed at slab rates or special sections?
The US based company is asking me to fill W-8BEN form which has a tax treaty benefit section, not filling it would lead US company to withhold 30% tax by default. Which Article of India-US tax treaty is applicable here so that tax treaty benefit can be availed leading to minimum/no tax withholding by the US company?
Article 15- Independent Personal/Professional Services (includes software development services)
Article 23 (Para 1 & 3)- Other Income
The next consideration is- what would be the domestic tax treatment of the amount in India?
Possible relevant sections to explore to ensure compliance: Section 2(24), Section 115BB, Section 115BBJ.
Section 2(24) states that "card game and other game of any sort" includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game.
This includes skill based shows like Indian Idol and Dance India Dance. KBC is also clearly a game show and included in this. But a hackathon isn't an entertainment programme, a game show or a game.
Section 115BB also relates to winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever.
Section 115BBJ specifically relates to and overrides 115BB for "online games”, defining them as games that are offered on the internet and are accessible by a user through a computer resource, and includes games of skill or chance or both.
This is widely construed to be encompassing games such as rummy, poker and fantasy sports etc.
Indian tax law leaves the interpretation of a game to common sense and doesn't formally define it. Hackathon isn't a game but an innovation challenge with a software deliverable/demo. It is an intellectual/technical competition. There is no wagering, gambling, or speculative element. The result is based on skill, coding, innovation, and judged by a panel, not algorithms or randomness.
What would be the right tax treatment/classification of this income for W-8BEN form's tax treaty section and domestic (Indian) filing?
For India, would this be added to total income and taxed at slab rates or special sections?
29 July 2025
1. Indicate the income as “Other Income” (Article 23 of the India–US tax treaty). This is not “game winnings.
2. The correct head of income for hackathon prizes is usually “Income from Other Sources” (Section 56). Such income is added to your total income and taxed at the applicable individual slab rates.
3. The sum received must be reported in your India tax return (ITR) as “Other Income".
4. If you receive the prize from an Indian entity, they may deduct TDS under Section 194B only if they consider it an award from a “game” (which legally is not the case for hackathons); more likely, no TDS is deducted.
2. The correct head of income for hackathon prizes is usually “Income from Other Sources” (Section 56). Such income is added to your total income and taxed at the applicable individual slab rates.
3. The sum received must be reported in your India tax return (ITR) as “Other Income".
4. If you receive the prize from an Indian entity, they may deduct TDS under Section 194B only if they consider it an award from a “game” (which legally is not the case for hackathons); more likely, no TDS is deducted.
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29 July 2025
Thank you so much for your informative and helpful response sir. Utterly grateful. This will help many people on the internet for years to come.
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30 July 2025
You are welcome.
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25 September 2025
Good luck...
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