Financial Year 1980-81
Circular No. 276 was issued by the Central Board of Direct Taxes on 19 July 1980. Its subject is Financial Year 1980-81.
Gives the section 194B deduction rates for the financial year 1980-81 as proposed in Part II of the First Schedule to the Finance (No. 2) Bill, 1980, superseding the interim direction in Circular No. 270 dated 26 May 1980 to continue the 1979 rates. For a person other than a company, resident or non-resident, the rate is 33 per cent, being income-tax of 30 per cent and surcharge of 3 per cent; for a non-resident it is the higher of that and the slab rates in Sub-Paragraph I of Paragraph A of Part III if the winnings had been his total income. A domestic company suffers 23 per cent, and a company that is not domestic 72.25 per cent. The rates apply to payments made on or after 18 June 1980, with no adjustment for payments already made. The working rules follow: no deduction where the winnings are Rs. 1,000 or less; where the prize is partly cash and partly in kind, deduction is computed on the aggregate of the cash and the value of the prize in kind, and where the prize is wholly in kind no deduction is required; the rates apply to prizes given after 18 June 1980 even if the draw or competition was held earlier; where the prize is paid in instalments deduction is made at each payment; tax is deducted from the prize money paid to the owner of the lucky ticket and not from bonus or commission paid to lottery agents or ticket sellers; the amount is rounded to the nearest rupee under section 288B; and the tax is paid to the Central Government on the same day where deducted on behalf of Government and otherwise within one week, with income-tax and surcharge shown separately in the challan.
The Board communicates each year the rates at which tax must be deducted from lottery and crossword puzzle winnings, here the rates proposed in the Finance (No. 2) Bill, 1980, adding that fresh instructions will follow if Parliament changes them.
FINANCIAL YEAR 1980-81
1748. Instructions for deduction of tax at source from winnings from lottery or crossword puzzle during financial year 1980-81 at the rates specified in Part II of the First Schedule to Finance (No. 2) Bill, 1980
1. I am directed to invite a reference to this Department’s Circular No. 270 [F. No. 275/17/80-IT(B)], dated 26-5-1980, wherein you were requested to issue necessary instructions for continuing to make deduction of income-tax at source from "winnings from lottery or crossword puzzle" at the same rates as were given in Part II of the First Schedule to the Finance Act, 1979.
2. You are aware that under section 194B, every person responsible for paying to any person, whether resident or non-resident, any income by way of winnings from any lottery or crossword puzzle in an amount exceeding Rs. 1,000 is required to deduct income-tax thereon at the rates specified in this behalf in the Finance Act of the relevant year. The rates of deduction of income-tax at source for the financial year 1980-81, as proposed in Part II of the First Schedule to the Finance (No. 2) Bill, 1980, are as follows :Rates of income-tax including surcharge
I. In the case of a person other than a company :—
(a) where the person is resident in India
33 per cent (IT 30 per cent + SC 3 per cent);
(b) where the person is not resident in India
33 per cent (IT 30 per cent + SC 3 per cent);
or
income-tax and surcharge on income-tax in respect of the income at the rates prescribed in Sub-Paragraph I of Paragraph A of Part III of the First Schedule to the Finance (No. 2) Bill,1980, if the winnings from lottery or crossword puzzle had been the total income,
whichever is higher.
II. In the case of a company :—
(a) where the company is a domestic company
23 per cent (IT 21.5 per cent + SC 1.5 per cent);
(b) where the company is not a domestic company
72.25 per cent (IT 70 per cent + SC 2.25 per cent).
2. It is requested that deduction of tax from winnings from lotteries and crossword puzzles may be made during the financial year 1980-81, on payments made on or after June 18, 1980, according to the above rates. No adjustments may be made for the rates of tax deduction in respect of payments already made. In case any changes are made by Parliament in the rates proposed in the Finance (No. 2) Bill, 1980, suitable instructions will be sent to you.
3. The substance of the main provisions in the law insofar as they relate to deduction of income-tax at source from winnings from lotteries and crossword puzzles is given hereunder :
(1) No tax will be deducted at source where the income by way of winnings from lottery or crossword puzzle is Rs. 1,000 or less.
(2) Where the prize is given partly in cash and partly in kind, income-tax will be deductible from each prize with reference to the aggregate amount of the cash prize and the value of the prize in kind. Where, however, the prize is given only in kind no income-tax will be required to be deducted.
(3) Income-tax will be deductible at the aforesaid rates during the financial year 1980-81, from prizes given after June 18, 1980, even if the relevant draw in respect of lottery or, as the case may be, the competition in respect of a crossword puzzle may have been held on or before that date.
(4) Where the lottery or crossword puzzle is paid in instalments, the deduction will be made at the time of actual payment of each instalment.
(5) Income-tax will be deductible from the amount of the prize money paid to the owner of the lucky ticket with reference to the amount paid to him. Income-tax is not deductible from the income by way of bonus or commission paid to lottery agents or sellers of lottery tickets on the sale made by them.
(6) In view of section 288B, the amount of tax to be deducted at source should be rounded off to the nearest rupee by ignoring amounts less than fifty paise and increasing amounts of fifty paise or more to one rupee.
(7) Tax deducted on behalf of the Government is required to be paid to the credit of the Central Government on the same day. In other cases, the tax deducted should be paid to the credit of the Central Government within one week from the date of deduction. The challans for paying in income-tax in the Government account may be obtained from the Income-tax Officer concerned. The income-tax and surcharge should be shown separately in the challans and/or while sending "Account head" details to the Accountants General/Zonal Accounts Officers.
(8) The relevant forms in relation to the provisions for deduction of income-tax at source from winnings from lotteries and crossword puzzle prizes are prescribed by the Income-tax Rules, 1962. In this connection, the following instructions may please be noted :
(a) In the case of any person, other than a company, it is open to the recipient of the prize to make an application in Form No. 13B to the Income-tax Officer concerned and obtain from him a certificate authorising the payer to deduct tax at such lower rates or deduct no tax as may be appropriate to his case. Such a certificate will be valid for the period specified therein unless it is cancelled by the Income-tax Officer earlier.
(b) The persons responsible for making any payment by way of winnings from lotteries or crossword puzzles should issue a certificate in Form No. 19B showing therein the amount of the prize, the amount of tax deducted at source and the date of payment in the Government account.
(c) The person making deduction of tax in accordance with section 194B from income by way of winnings from lotteries or crossword puzzles should sent to the Income-tax Officer having jurisdiction to assess him the statement in Form No. 26B quarterly on July 15, October 15, January 15 and April 15 in respect of deductions made by him during the immediately preceding quarter.
4. These instructions may be brought to the notice of all concerned under the control of the State Government.
5. In cases of doubt the Income-tax Officer concerned may be consulted.
Circular : No. 276 [F. No. 275/17/80-IT(B)], dated 19-7-1980.
A dispute over deduction on a 1980-81 lottery prize, particularly where the prize was part car and part cash or where the organiser deducted from an agent's commission.
A resident wins a prize of Rs. 50,000 in cash paid in August 1980. The payer deducts 33 per cent, Rs. 16,500, and pays it to the Central Government within one week, showing income-tax of Rs. 15,000 and surcharge of Rs. 1,500 separately in the challan.
Forms it names. Form No. 13B, Form No. 19B, Form No. 26B
Source: the Income Tax Department’s own published text — its page for this instrument.
