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Game shows prize money is taxable @30%

Monday, November 01, 2010
By Anand Tibrewala

I have seen some advertisements in the newspapers by some infrastructure companies stating that additional Tax Rebate of Rs.6,180/- is available to an individual if he invests Rs.20,000 in these Bonds. Can you throw some light on theses Bonds and the claim made in the advertisement?
-S.P.Rajan, Khar Road 
Ans : In the last budget the Finance Minister introduced a new clause in the saving scheme for individuals and HUF. According to these changes the assessee in addition to saving of Rs.1,00,000 in existing schemes can invest additional Rs.20,000/- in Infrastructure Bonds issued by recognized companies. Thus the total deduction would go up to Rs.1,20,000 for the assessee. These amendments were made to augment long term saving and investment required to boost the infrastructure sector. Thus if an assessee is paying tax at the highest rate then he can save tax of Rs.6,180/- by investing in these Bonds.
Recently I had participated in the game show and I managed to win a prize of Rs.10,000,00. I was stunned to receive a cheque of Rs.7,00,000 as against this. I was informed that this income is subject to a withholding tax of 30 %. Please throw some light on the subject.
-Narayan.Mangesh, Mumbai Central 
Ans : First of all let me congratulate you for getting an opportunity to participate and win a decent prize from the game show. Yes it is true that all such income is treated as casual income under the Income Tax Act, 1961. The casual income is subject to 30 % withholding tax in India under the Income Tax Act, 1961. The organizers would have furnished a TDS certificate for the withholding tax. This amount could be claimed as set off while filing your income tax return.
I was a Non-Resident Indian till last year. From the current year onwards I will become a Resident in India. Accordingly, my entire income would become taxable in India. I have left behind a house in USA before migrating to India. This house is given on rent. I pay Muncipal Tax locally in USA. Can I get a deduction for the Municipal Tax paid in USA?
-Dennis.Phillip, Grant Road 
Ans : Yes, you have correctly predicted that your global income would be taxable in India once you become a resident in India. Accordingly, the Rent earned in USA would be taxable in India. The local Municipal Tax paid by you against the said house is an expense allowed to be deducted under section 23 of the Income Tax Act, 1961. Hence, without any hesitation you should claim deduction for the said payment.

(The Author is a CA and specializes in taxation matters. He is a Senior Partner at the leading Chartered Accountancy firm, AD & Company)
If you have any Tax Query email it to us at and we will find you a solution.

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