BUISENESS MANAGEMENT
TAXES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Prizes from cockfighting in baranggay
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Prizes from swimming competition in school intramurals
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Prizes from national sports competition
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Prizes from singing contest in a musical competition
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Detailed explanation-1: -As per Section 194B of The Income-tax Act, 1961, if the prize money exceeds ₹10, 000, then the winner will get the prize money after the deduction of TDS online at 30% (if the winner is Resident), at 30% Surcharge (if applicable), 4% Educational Cess (if the winner is Non-Resident).
Detailed explanation-2: -Please note that it does not matter whether the income of the winner is taxable or not. The prize distributor is liable to deduct tax at the time of payment. In the case of winnings from horse races, TDS will be applicable if the amount exceeds Rs 10, 000. No Deduction/Expenditure is allowed from such income.
Detailed explanation-3: -TRUE 15. Foreign governments and foreign government-owned and controlled corporations are exempt from final tax.
Detailed explanation-4: -Such awards being in the nature of casual income are not a regular source of employee’s income. Therefore, under Section 10(3) of the Income Tax Act, 1961 the amount of awards will be exempted from income tax and this amount will not be included in the total taxable income of the employee.