Tds
This query is : Resolved
CA. Mohit chaturvedi
(Querist)
10 April 2015
R Professionals,
Please clarify whether income earned by agents of life insurance corporation, by way of competition prizes held in LIC, is taxable or not?
if yes the under which section it is taxable?
Please clarify whether income earned by agents of life insurance corporation, by way of competition prizes held in LIC, is taxable or not?
if yes the under which section it is taxable?
10 April 2015
In my opinion, it is a winnings from games which is covered u/s 194B. If the payment exceeds Rs.10,000/-, TDS applicable is 30.9%.
https://yourfinancebook.com/section-194b-tds-winning-lottery/
https://yourfinancebook.com/section-194b-tds-winning-lottery/
CA. Mohit chaturvedi
(Querist)
10 April 2015
The agent is not winning a game, he is winning a competition prize from LIC.
10 April 2015
The definition of game is pretty clear and unambiguous. Any contest whether in entertainment
programme on TV or e
lectronic mode or otherwise has been covered in it. The thumb rule is:
1.
A contest
2.
Competing participants
3.
Prizes to be won
If the three conditions are satisfied, it is a game.
Under Section 194B of the
Income Tax Act,
30 per cent tax is deducted on any prize money in excess of
Rs
.
10,000
received by way of
winnings from games, lotteries etc.
programme on TV or e
lectronic mode or otherwise has been covered in it. The thumb rule is:
1.
A contest
2.
Competing participants
3.
Prizes to be won
If the three conditions are satisfied, it is a game.
Under Section 194B of the
Income Tax Act,
30 per cent tax is deducted on any prize money in excess of
Rs
.
10,000
received by way of
winnings from games, lotteries etc.
10 April 2015
For supporting you, let me put you through this proposition also.
Thus
in our opinion
, awards given based on merit and performance may not fall under the
provisions of section 2(24
) (
ix) read with section 194B
.
The above can be justified based on the following case law
s
:
CASE LAWS:
In the case
Sampanna Kuries (P.) Ltd.
v.
ITO
[2004] 141 Taxman 615 (Ker.) the essential elements
of ‘lottery’ were discussed and the following was
held:
(
i
)
A
prize or some advantage in the nature of a prize;
(
ii
)
Distribution
thereof by chance; and
(
iii
)
Consideration
paid or promised for purchasing the chance.
Thus, unless all the three elements are satisfied, the prize scheme cannot be considered as a
lottery. A price must be charged for participating in the draw. The chance of a person getting the
prize could not
be treated as part of the bargain unless independent consideration was there
with respect to the prize awarded. Similar views were also taken in the case
Canaan Kuries &
Loans (P.) Ltd. v. Income
-
tax Officer
[2005] 142 TAXMAN249 (KER).
Thus
in our opinion
, awards given based on merit and performance may not fall under the
provisions of section 2(24
) (
ix) read with section 194B
.
The above can be justified based on the following case law
s
:
CASE LAWS:
In the case
Sampanna Kuries (P.) Ltd.
v.
ITO
[2004] 141 Taxman 615 (Ker.) the essential elements
of ‘lottery’ were discussed and the following was
held:
(
i
)
A
prize or some advantage in the nature of a prize;
(
ii
)
Distribution
thereof by chance; and
(
iii
)
Consideration
paid or promised for purchasing the chance.
Thus, unless all the three elements are satisfied, the prize scheme cannot be considered as a
lottery. A price must be charged for participating in the draw. The chance of a person getting the
prize could not
be treated as part of the bargain unless independent consideration was there
with respect to the prize awarded. Similar views were also taken in the case
Canaan Kuries &
Loans (P.) Ltd. v. Income
-
tax Officer
[2005] 142 TAXMAN249 (KER).
CA. Mohit chaturvedi
(Querist)
14 April 2015
Thanking you......!!
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