With the massive success of KBC in India, many channels have launched various game shows and award the winning contestants a good amount of money. In fact, these days a good amount of money is also offered to winners of various reality shows like Big Boss and also to winners of various other shows like the Indian Idol, Dance India Dance, India’s Rawstar, MTV Roadies, etc.
In this article, we focus on the income tax payable on winning from such TV & Online Game Shows and the manner of disclosing such income in the income tax return.
Tax on Prize Money earned from TV Game Shows
The money earned from such game shows is taxable under Section 56(2)(ib) and is to be disclosed under head “Income from Other Sources” at the time of filing of the income tax return.
As per Section 56(2)(ib), any income from any of the following sources is chargeable to tax as “Income from Other Sources”:-
- Crossword Puzzles
- Races incl. Horse Races
- Card Games and other Games of any sort
- Gambling or Betting of any form or nature whatsoever
Finance Act 2001 clarified that Card Games and other game of any sort includes any game show, an entertainment programme on television or electronic mode in which people compete to win prizes or any other similar game.
Although in some TV Shows, it is not only a game as their is it involves good use of knowledge, the income earned from such shows would still be classified under this section and taxed at the rates mentioned here under.
Income Tax @ 30.9% on Winnings from such TV Shows and Online Winnings
Income earned from winning KBC Game Show, Big Boss, Nach Baliye, India’s Got Talent, Fear Factor and other game shows is taxable at a flat rate of 30%. Over and above this income tax rate of 30%, Education Cess @ 2% and SHEC @ 1% would also be levied on this 30% tax and therefore the total tax rate on such winnings from Game Shows comes out to be 30.9%.
The benefit of income tax slab rates would not be available in such a case and income would be taxed at a flat rate of 30.9%.
If the prize money awarded by an organisation is more than Rs. 10,000 to any person in a financial year, TDS under Section 194B would also be applicable @ 30.9%. The prize money would be awarded to the contestant after deduction of 30.9% TDS.
Income Tax Deductions allowed from such Prize Money
As per Section 58(4), in a taxpayer has earned income from Lotteries, Crossword puzzles, Races, Card Games, TV & Online Games, Gambling etc. – No deduction in respect of any expenditure or allowance in connection with such income shall be allowed while computing such income.
In other words, the entire income of such winnings, without any expenditure or allowance, will be taxable. In fact, income tax deductions allowed under Chapter VI-A i.e. deductions from Section 80C to Section 80U would also not be available to be claimed against such income.
Tax on Other Incomes earned by the person who has won the Game Show
Tax on Other Incomes of the person who has won the Game Show would continue to be taxable as per the Income Tax Slab Rates.
For eg: If a person earns Rs. 1 Crore from a TV Show and earns Rs. 15 Lakhs as Income from Salary/Business/ any other source, he would be required to pay tax as follows:-
Tax on Rs. 1 Crore @ 30.9% i.e. Rs. 30,90,000
Tax on Rs. 15 Lakhs as per the Income Tax Slab Rates after allowing for deductions.
Although Income Tax Deductions are not available from Winning from such Game Shows, deductions would continue to be available on his other income i.e. Rs. 15 Lakhs.
Other Relevant Points regarding Tax on Winning from Game Shows
- In case the winner is being awarded money in cash/cheque/demand draft/online transfer etc., such payment would be made after deduction of TDS @ 30.9%
- In case the winner is being awarded a gift in kind, the winner would be required to estimate the value of such payment and then pay tax @ 30.9% from his own pocket.
- In case the winning contestant diverts a certain percentage of such winning in favour of the Govt. or in favour of an agency conducting such lottery, then such amount will not be taxed in the hands of the winner.
- The other incomes earned by the winner apart from winning classified under this section would be taxable as per the normal provisions of the income tax act i.e. as per income tax slab rates/ capital gains tax rate etc as the case may be.
- There is now way to save tax on winning from such TV Shows/ Online Game Shows and the person earning the income would be required to pay tax on the total value of earnings.