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Practical question - Please help

Aditya Sinha (CA Final, B.Com(H)) (117 Points)

28 August 2011

Pls help me with the following question...

A person won a lottery of1crore and after TDS he got70lakh net..

He made a fixed deposit of it and let after 8 yrs he got 1.40crore..( 70 lakh principal+ 70 lakh interest )

So is this whole 1.40cr taxable or only 70 lakh will be taxable which was received as interest..???? ( as principal 70 lakh was already net of tax..)

pls reply... thanks...!!!

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8 Replies

(Guest)

in the year of winnings the whole 1 crore will be taxable so tax on 1 crore is around 28 lakhs and the tds is 30 lakhs so that person will get refund of 2 lakhs.

in case of fd only 70 lakhs interest will be taxable but not in the single year of maturity instead you have to take proportionate accrued interest for 8 years.

ROHIT CHATURVEDI (CA Final Student ) (2298 Points)
Replied 28 August 2011

I think the gross Rs. 1 crore should be included in the GTI and after calculating the tax liability the TDS of Rs. 30 lacs is to be deducted .........as regarding interest, it will be charged to tax when it is received at maturity i.e. after 8 yrs.

(Guest)

yes rohit i agree with your first point but if you charge rs 70 lakhs in the year of maturity you have to pay more tax as compare to paying tax on accrual basis....

himanshu (student) (95 Points)
Replied 28 August 2011

since the lottery amount is taxed in the year which it was accrued under the head casual income so will not be taxed after the end of 8th but the interest will be taxed as it accures overs the years under the head other sources.