Financial Year 1980-81
Circular No. 280 was issued by the Central Board of Direct Taxes on 20 September 1980. Its subject is Financial Year 1980-81.
The Board's instruction on deduction from winnings from horse races for the financial year 1980-81. Section 194BB requires a book-maker, or a person licensed by Government for horse racing at a race course, who pays anyone winnings from a horse race exceeding Rs. 2,500 to deduct at the rates in force at the time of payment. Under Part II of the First Schedule to the Finance (No. 2) Act, 1980 the rates are 33 per cent, being 30 per cent tax and 3 per cent surcharge, for a resident non-company payee; for a non-resident the same 33 per cent or the tax and surcharge the income would bear as total income, whichever is higher; 23 per cent for a domestic company; and 75.25 per cent for a foreign company. These rates apply to payments made after 18th June 1980, and where deduction had already been made at the rates in the Finance Act, 1980, no adjustment need be made. The tax is to be paid into a Government treasury, the Reserve Bank, the State Bank or another authorised public sector bank within one week from the last day of the month of deduction, on the correct challan, being No. 2 with the red colour band for company payees and No. 8 with the blue colour band for others, the old forms ITNS 39A and ITNS 39 continuing alongside. The circular warns of section 276B, under which a failure without reasonable cause or excuse to deduct or to pay over is punishable with rigorous imprisonment of six months to seven years and fine where the amount exceeds Rs. 1,00,000, and three months to three years and fine otherwise. It states that the instructions are not exhaustive and that the Act and the Finance Act govern.
The annual communication of the rates and the machinery to those responsible for deducting from race winnings.
FINANCIAL YEAR 1980-81
1764. Instructions for deduction of tax at source from winnings from horse race during financial year 1980-81 at the rates specified in Part II of First Schedule to Finance (No. 2) Act, 1980
1. Section 194BB enjoins on any person, being a book-maker or a person to whom a licence has been granted by the Government under any law for the time being in force for horse racing in any race course and who is responsible for paying to any person any income by way of winnings from any horse race in an amount exceeding Rs. 2,500, to deduct income-tax thereon, at the rates in force, at the time of payment thereof.
2. The rates are prescribed by the Finance Act of the relevant year. The Finance (No. 2) Act, 1980 has prescribed the rates for deduction of tax at source for the financial year 1980-81 as specified in Part II of the First Schedule to the said Act. They are as in table given below :Rates of income-tax including surcharge
I. In the case of a person other than a company—
(a) where the person is resident
33 per cent (IT 30 per cent + SC 3 per cent);
(b) where the person is not resident
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) Act, 1980, if such income 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
75.25 per cent (IT 70 per cent + SC 5.25 per cent).
3. It is requested that the deduction of tax at source from the payments made after June 18, 1980 of income by way of winnings from any horse race may be made during the financial year 1980-81 according to the above rates. If any deduction has already been made according to the rates prescribed in the Finance Act, 1980, adjustment therefor may not be made.
4. The tax deducted should be paid to the credit of the Central Government by remitting it into the government treasury or the office of the Reserve Bank of India or State Bank of India or any other authorised public sector bank within one week from the last day of the month in which the deduction is made. While making the payment of tax deducted at source to the credit of the Central Government, it may please be ensured that the correct amount of income-tax and surcharge is recorded in the relevant challan. It may also be ensured that the right type of challan is used. New colour band challans are being introduced with separate numbers. The relevant challan for making payment of tax deducted at source from payments by way of winnings from horse races made to the company-assessees is No. 2 with "Red Colour Band" and in respect of payments made to non-company-assessees is No. 8 with "Blue Colour Band". Along with these colour band challans the old challan forms will continue to be used. The old challan forms are No. ITNS 39A for payments to company-assessees and ITNS 39 for payments to non-company-assessees.
5. Attention is also invited to section 276B wherein it is provided that if a person without reasonable cause or excuse fails to deduct, or after deducting fails to pay the tax as required under the provisions of Chapter XVII-B, he shall be punishable—
(i) in a case where the amount of tax which he has failed to deduct or pay exceeds Rs. 1,00,000, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; and
(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine.
6. These instructions are not exhaustive and are issued only with a view to helping those responsible for making deductions of tax under this section. Whenever there is a difference of opinion, a reference should always be made to the provisions of the Act, and the relevant Finance Act through which the changes in the tax structure are made.
7. In case any assistance is required, the Income-tax Officer concerned or the local Public Relations Officer of the Income-tax Department may be approached for the same, who will, if necessary, obtain the orders of higher authorities in the matter.
Circular: No. 280 [F. No. 275/19/80-IT(B)], dated 20-9-1980.
In an old prosecution or section 201 proceeding against a race course or book-maker, and in a winner's claim for credit of tax deducted in that year.
Source: the Income Tax Department’s own published text — its page for this instrument.