The trend of organizing racehorses have seen a huge uproar in past few years. With so many people betting on their favourite “studs” to win money, the intervention of Income Tax Law has surely not been far behind. This brought into existence Section 194BB.
Who is required to deduct TDS u/s 194BB?
As per this section, a person
- who is a bookmaker or
- have a government license for organizing horse races, wagering or betting then such person will be responsible to deduct tax.
What is the rate, time etc of TDS u/s 194BB?
TDS Rate under section 194BB is also 30% and deduction is made at the time of payment. No tax deduction will be required if the winning amount is within Rs 10000.
Penalty & prosecution when failed to comply with provisions of Sec 194BB
The person responsible for the tax deduction as discussed, if fails to deduct tax then as per section 271C, he needs to pay a penalty equal to the amount of tax deducted will be levied on him/her.
Secondly, as per section 276B, only deduction of such tax is not enough, It should be deposited with the government. Non-doing this can result into imprisonment of minimum 3 months up to 7 years fine can be imposed.
Important Point: Sometimes it may happen that the winning from such games is not given in cash but in kind like a car, mobile phone, foreign trip etc. In these cases, the value of the gift is taken as the relevant Market Value and gift shall be released only after TDS amount is taken from the payee (receiver).
Difference Section Between 194B and 194BB:
| Section-194B | Section-194BB |
|---|---|
| Rate of Tax 30% | Rate of Tax 30% |
| Winning from lottery or crossword puzzle or card game and other game of any sort | Winning from horse race |
| TDS shall be deductible if the amount exceeds Rs. 10,000 | Book maker or a person whom license has been issued by government for horse racing or for wagering |
| Liable to deduct the time of payment | TDS shall be deductible if the amount exceeds Rs. 10,000 |
| If the winning is wholly in kind or partly in kind, Then the available cash shall be used to pay the taxes first | Liable to deduct the time of payment |
| Every person responsible for paying any person | - |
