TDS u/s. 194B, 194BB and 194G of the Income-tax Act, 1961, from winnings from lottery, crossword puzzles, horse races or from commission, etc., paid on sale of lottery tickets--Rates of tax applicable during the financial year 1992-93 - Income Tax - 631/1992

TDS u/s. 194B, 194BB and 194G of the Income-tax Act, 1961, from winnings from lottery, crossword puzzles, horse races or from commission, etc., paid on sale of lottery tickets--Rates of tax applicable during the financial year 1992-93 Circular No. 631 Dated 20/8/1992 Reference is invited to the Board's Circular No.616 (F.No. 275/137/91-IT(B)), dated 22nd November, 1991 (See [1991] 192 ITR (St.) 273), on the above mentioned subject wherein the rates at which the deduction of tax under sections 194B, 194BB and 194G of the Income-tax Act, 1961, was to be made during the financial year 1991-92 from winnings from lotteries, crossword puzzles, horse races and from commission, etc., paid on sale of lottery tickets, were communicated. 2. There is no change in the rates of tax which will be applicable during the financial year 1992-93 in the matter of deduction of tax at source under section 194B, 194BB and 194G of the Income-tax Act. The salient provisions relating to deduction of tax at source under the aforesaid sections are as follows: (i) As per section 194B, the person responsible for paying to any person any income by way of winnings from lotteries or crossword puzzles, in an amount exceeding Rs. 5,000 (Rupees five thousand only) shall, at the time of payment thereof, deduct income-tax thereon at the rate in force. For the financial year 1992-93, the rate at which tax is to be deducted is 40 per cent. (plus surcharge referred in para 3),-- (ii) As per section 194BB, any person, being a book-maker or a person to whom a licence has been granted by the Government under any law for the time being in force, for horse racing in any race course or for arranging for wagering or betting in any race course, who is responsible for paying to any person any income by way of winnings from any horse race in an amount exceeding Rs. 2,500 (Rupees two thousand and five hundred only) shall, at the time of payment thereof, deduct income-tax thereon at the rate in force, viz., 40 per cent. (plus surcharge, referred in para 3),-- (iii) As per section 194G(1), any person who is responsible for paying, on or after the 1st day of October, 1991, to any person who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize (by whatever name called), on such tickets in an amount exceeding Rs.1,000 (Rupees one thousand only), shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by issue of a cheque or a draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of 10 per cent. (plus surcharge, referred in para 3). It is clarified in this regard that where any such income, e.g., commission, remuneration, etc., is credited to any account, whether called "Suspense Account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the tax thereon will have to be deducted at source. 3. The amount of income-tax to be deducted at the aforesaid rates shall be further increased by a surcharge, for the purposes of the Union, at the following rates: ( i ) In a case where the payee is a non-corporate resident person - 12% ( ii ) In a case where the payee is a domestic company - 15%. 4. The responsibilities, obligations, etc., under the Income-tax Act, of the person deducting tax at source are as follows: (a) According to the provisions of section 200, any person deducting any sum in accordance with the provisions of sections 194B, 194BB and 194G, etc., shall pay within the prescribed time, the sum so deducted, to the credit of the Central Government. Reference in this regard is invited to rule 30 of the Income-tax Rules, 1962, which prescribes the time for payment of tax into the Government"s account. Normally, the tax is required to be deposited within one week from the date of deduction of tax. Where, however, deduction is made by or on behalf of the Government, the sum has to be credited to the Central Government on the date of the deduction itself. If a person fails to deduct tax at source or, after deducting, fails to pay the tax to the credit of the Central Government, he shall be liable to pay simple interest at fifteen per cent. per annum on the amount of such tax from the date on such tax was deductible to the date on which such tax from the date on such tax was deductible to the date on which such tax is actually paid into the Government account. Reference in this regard is also invited to section 271C, according to which, a person who fails to deduct the whole or any part of the tax as required under the provisions of Chapter XVII of the Act, shall pay, by way of penalty, a sum equal to the amount of tax not deducted by him. Further, section 276B lays down that if a person fails to pay to the credit of the Central Government, the tax deducted at source by him, he shall be punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to seven years and with fine. (b) According to the provisions of section 203, every person responsible for deducting tax at source is required to furnish a certificate to the effect that the tax has been deducted and, to specify therein, the amount deducted and certain other prescribed particulars. The certificate has to be furnished within the prescribed period (as given in rule 31 of the Income-tax Rules, 1962, generally within one month and fourteen days of the date of payment/credit) to the person to whose account credit is given or to whom payment is made or to whom the cheque or warrant is issued as the case may be. The certificate for tax deduction under section 194G has to be issued in Form No.16A (copy enclosed at Annexure I) on tax deductors' own stationery. In case of deduction under sections 194B and 194BB, however, the certificate is required to be furnished in Form No.16B, printed by the Central Government (which is to be obtained from the concerned Commissioner of Income-tax by making a nominal payment). If a person fails to furnish the certificate of tax deduction he shall be liable to pay, by way of penalty under section 272A, a sum which shall not be less than Rs.100 but, which may extend to Rs.200 for each day during which the failure continues. (c) According to the provisions of section 203A, it is obligatory for all persons responsible for deducting tax at source to obtain a tax deduction account (TAN) and quote the same in the challans. TDS certificates, returns, etc. Detailed instructions in this regard are available in this Department's Circular No. 497, dated 9-10-1987 (See [1988] 169 ITR (St.) 54. If a person fails to comply with the provisions of section 203A, he shall pay by way of penalty under section 272BB, a sum which may extend to Rs. 5,000. (d) According to the provisions of section 206, read with rules 36A and 37 of the Income-tax Rules, the prescribed person in the case of every office of Government, the principal officer in the case of every company, the prescribed person in the case of every local authority or other public body or association, every private employer and every other person responsible for deducting tax under the provisions of Chapter XVII of the Income-tax Act (which includes sections 194B, 194BB and 194G) shall, within the prescribed time, after the end of each financial year, prepare and deliver or cause to be delivered to the designated/concerned Assessing Officer, a return of deduction of tax under section 194B, 194BB and 194G. The returns for tax deduction under sections 194B and 194BB have to be filed by 31st May following the financial year in which tax deduction is made. These returns have to be filed in the prescribed forms (Nos.26B and 26BB respectively). For deduction under section 194G, the return has to be filed in Form No.26H by the 30th June following the financial year in which the deduction is made. If a person fails to furnish in due time the annual return, he shall be liable to pay, by way of penalty under section 272A, a sum which will not be less than Rs.100 per day, and, not more than Rs.200 per day, for each day during which the default continues, so, however, that his amount shall not exceed the amount of tax which was deductible at source. 5. It may be added that the Finance Act, 1992, has inserted sub-sections (2) and (3) in section 194G with effect from 1-6-1992 in order to obviate the hardship in the case of persons engaged in the lottery business, whose total income bears no tax liability or bears a tax liability justifying deduction of tax at source at a rate lower than 10 per cent. Such person can make an application in this behalf to the Assessing Officer, who will, after satisfying himself of the correctness of the facts and circumstances of the case, give to him such certificate as may be appropriate. On the basis of this certificate, the person responsible for paying the income by way of commission, remuneration or prize (by whatever name called) shall, until such certificate is cancelled by the Assessing Officer, deduct income-tax at the rates specified in such certificate or deduct no tax, as the case may be. 6. These instructions have been issued with a view to helping the persons responsible for making deduction of tax at source under sections 194B, 194BB and 194G. However, if there is any doubt, reference may be made to the provisions of the Income-tax Act, 1961, the Income-tax Rules, 1962, and the Finance Act, 1992. In case any assistance is required, the Assessing Officer concerned, or, the local public relations officer of the Income-tax Department may be approached. 7. Copies of the circular will be available with the Directorate of Income-tax (RSP PR), 6th Floor, Mayur Bhavan, Connaught Circus, New Delhi-110001. (Sd.) Rajesh Chandra, Under Secretary, Central Board of Direct Taxes. Annexure I Form No. 16A [ See rule 31(1)( b )] Certificate of deduction of tax at source under section 203 of the Income-tax Act, 1961 For interest on securities; dividends; interest on time deposit s referred to in clauses ( vii ) and ( viia ) of sub-section (3) of section 194A; insurance commission; payments in respect of depos its under National Savings Scheme; payments on account of repur chase of units by the Mutual Fund or Unit Trust of India; commis sion, remuneration or prize on sale of lottery tickets; commis sion or brokerage; income from units referred to in section 196B Name and address of the person deducting tax TDS circle where Annual Return under section 206 is to be delivered Name and address of the person to whom payment is made or in whose account it is credited ...................................................... ................................................... ........................................................ ...................................................... ................................................... ........................................................ ...................................................... ................................................... ........................................................ TAX DEDUCTION A/C NO. OF THE DEDUCTOR NATURE OF PAYMENT PAN/GIR NO. OF THE PAYEE PAN/GIR NO. OF THE DEDUCTOR ………………………………………………. FOR THE PERIOD.............19......... TO 19.......... DETAILS OF PAYMENT, TAX DEDUCTION AND DEPOSIT OF TAX INTO CENTRAL GOVERNMENT ACCOUNT Date of payment/credit Amount paid/credited (Rs.) Amount of income-tax deducted (Rs.) Rate at which deducted Date Challan No. of deposits of tax into Central Government Account Name of bank and branch where tax deposited Certified that a sum of Rs. (in words)..........................has been deducted at source and paid to the credit of the Central Government as per details given above. Place....................... ................................................................. Date........................ Signature of person responsible for deduction of tax Full Name........................................... Designation........................................