An Indian citizen travelled to UK as a tourist and played a UK lottery. He won some amount. No taxes were cut in UK.
UK officials stated this -
"All lottery prizes in the UK are awarded tax-free, regardless of how much you win or which game you play. Lottery winnings are not treated as income by HM Revenue & Customs, which is the government department responsible for taxation."
When he transfers the money to India, what percentage of the winnings will be paid as taxes?
For AY 2020-21, assuming assessee is ordinary resident, 30% tax applicable u/s 115BB on lottery income. Surcharge is applicable as under: (A) Between 50 Lakhs - 1 Crore: 10% & (B) Between 1 Crore to 2 Crores: 15% (C) Between 2 Crores to 5 Crores: 25% & (D) Beyond 5 Crores: 37%. HEC @ 4% will apply on total of tax & SC. Since lottery earning is tax exempt in UK, there is no question of Foreign Tax Credit claim.
FEMA offers 2 routes for inward remittances:
(A) Rupee Drawing Arrangement: No cap on amount for non-business purposes OR (B) Money Transfer Scheme: USD 2,500 per transfer, subject to 30 transfers in FY.
FIRC (Foreign Inward Remittance Certificate) to be obtained from bank in India as proof of legitimate fund transfer.
Chirag P Shah & Co. Chartered Accountant
Pune
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