Financial Year 1985-86
Circular No. 425 was issued by the Central Board of Direct Taxes on 24 July 1985. Its subject is Financial Year 1985-86.
States the rates for deduction under section 194BB from winnings from horse races for the financial year 1985-86, as specified in Part II of the First Schedule to the Finance Act, 1985. For a resident other than a company the rate is 30 per cent with no surcharge; for a non-resident other than a company it is the higher of 30 per cent or the slab rates in Sub-Paragraph I of Paragraph A of Part III of the Schedule as if the winnings were his total income; for a domestic company 22.575 per cent and for a company other than a domestic company 68.25 per cent, both inclusive of surcharge. The tax deducted must be remitted to the credit of the Central Government at the Reserve Bank of India, the State Bank of India or another authorised public sector bank within one week from the last day of the month of deduction, on the right challan, No. 2 with the red colour band for a company payee and No. 8 with the blue colour band for a non-company payee. The circular sets out the prosecution provision in section 276B, under which 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 one hundred thousand rupees, and three months to three years and fine in any other case.
The Board's annual instruction on the rate of deduction from horse race winnings, following Circular No. 389, dated 4-8-1984 for the financial year 1984-85.
FINANCIAL YEAR 1985-86
1759. Instructions for deduction of tax at source from winnings from horse races during financial year 1985-86 at the rates specified in Part II of the First Schedule to Finance Act, 1985
1. I am directed to invite a reference to this Department’s Circular No. 389 [F. No. 275/16/84-IT(B)], dated 4-8-1984 on the above subject, wherein the rates at which deduction of tax under section 194BB to be made during the financial year 1984-85 from winnings from horse races were communicated.
2. The Finance Act, 1985 prescribes the rates for deduction of tax at source for the financial year 1985-86 as specified in Part II of the First Schedule to the said Act. They are as below :
Rates of income-tax including surcharge(i) In the case of a person other than a company :
(a) where the person is resident
IT 30 per cent, SC Nil;
(b) where the person is not resident
IT 30 per cent of the amount of the income;
or
income-tax and 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 Act, 1985 (Annex), 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
22.575 per cent (IT 21.5% + SC 1.075 per cent)
(b) where the company is not a domestic company
68.25 per cent (IT 65 per cent + SC 3.25 per cent)
3. The tax deducted should be paid to the credit of the Central Government by remitting it into 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. The relevant challan for making payment of tax deducted at source from payments by way of winnings from horse race made to company-assessee is No. 2 with "Red Colour Band" and in respect of payments made to non-company-assessee is No. 8 with "Blue Colour Band".
4. 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 one hundred thousand rupees, 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.
5. These instructions are not exhaustive and are issued only with a view to helping the persons 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.
Circular: No. 425 [F. No. 275/31/85-IT(B)], dated 24-7-1985.
ANNEX - EXTRACT FROM THE FINANCE ACT, 1985 - SUB-PARAGRAPH I OF PARAGRAPH A OF PART III OF THE FIRST SCHEDULE
Paragraph A
Sub-Paragraph I
In the case of every individual or Hindu undivided family or unregistered firm or other association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii ) of clause (31) of section 2 of the Income-tax Act, not being a case to which Sub-Paragraph II of this Paragraph or any other paragraph of this Part applies.
Rates of income-tax(1)
where the total income does not exceed Rs. 18,000
Nil;
(2)
where the total income exceeds Rs. 18,000 but does not exceed Rs. 25,000
25 per cent of the amount by which the total income exceeds Rs. 18,000;
(3)
where the total income exceeds Rs. 25,000 but does not exceed Rs. 50,000
Rs. 1,750 plus 30 per cent of the amount by which the total income exceeds Rs. 25,000;
(4)
where the total income exceeds Rs. 50,000 but does not exceed Rs. 1,00,000
Rs. 9,250 plus 40 per cent of the amount by which the total income exceeds Rs. 50,000;
(5)
where the total income exceeds Rs. 1,00,000
Rs. 29,250 plus 50 per cent of the amount by which the total income exceeds Rs. 1,00,000.
In a demand or prosecution against a race club for failure to deduct or to pay over tax on winnings in the financial year 1985-86.
Source: the Income Tax Department’s own published text — its page for this instrument.