Deduction of tax at source-Sections 194B and 194BB of the I.T. Act, 1961-Deduction from winnings from lottery or crossword puzzles or horse races-Rates of tax applicable during the financial year 1986-87 - Income Tax - 478/1987

Deduction of tax at source-Sections 194B and 194BB of the I.T. Act, 1961-Deduction from winnings from lottery or crossword puzzles or horse races-Rates of tax applicable during the financial year 1986-87 Circular No. 478 Dated 14/1/1987 From B. Nagarajan, Director, Central Board of Direct Taxes. To All State Governments, (including Union Territories Administration), All Race Clubs. Sir, Subject: Deduction of tax at source-Sections 194B and 194BB of the I.T. Act, 1961-Deduction from winnings from lottery or crossword puzzles or horse races-Rates of tax applicable during the financial year 1986-87. I am directed to refer to this Department's Circular No. 467 [F. No. 275/69/86-IT(B)] dated 21-8-1986 [Printed at [1986] 161 ITR (St.) 125 and [1986] 28 Taxman, Parts 3 and 4, pages 100-102] on the above subject and to say that enquiries have been received from various quarters about the quantum of income by way of winnings from lottery/crossword puzzles/horse races that is exigible to the provisions relating to deduction of tax at source. The position is, therefore, clarified as under: (1) No tax shall be leviable in respect of winnings from lottery/crossword puzzles/horse races, where the amount received from such winnings together with any sum received as casual and non-recurring receipt in the aggregate does not exceed Rs. 5,000 in a year. (2) Where such winnings exceed Rs. 5,000, tax is to be deducted at source at the rate of 40% on the gross winnings, after treating Rs. 5,000 as exempt under the provision of section 10(3) of the Income-tax Act, 1961, if such payment is made on or after 1-6-1986. The term "gross winnings" appearing herein means the payment received by the prize winner after deduction of the amount to be paid to commission agents. 2. The contents of this circular may please be brought to the notice of all concerned. 3. The copies of this Circular will be available with the Director of Inspection (RS PR), 6th Floor, Mayur Bhawan, New Delhi. Yours faithfully, (Sd.) (B. Nagarajan), Director, Central Board of Direct Taxes.