Deduction of tax from winnings from horse races u/s.194 BB of the Income Tax Act. - Income Tax - 1199/CBDT

INSTRUCTION NO. 1199/CBDT Dated : August 10, 1978 Section(s) Referred: 194BB Statute: Income - Tax Act, 1961 I am directed to refer to shri.S.N. Shende's D.O.F.No.142(4)/78-TPL 25th May, 1978 enclosing copies of the notification No.2306/F.No.142(4)/78-TPL, dated 25th May, 1978, containing Income-tax Rules, 1978 regarding deduction of tax at source from winnings from horse races as required u/s.194 BB of the I.T.Act. 2. As you are aware income-tax will be deductible at source where the income by way of winnings from any horse races in an amount exceeding Rs.2500 is paid after 31-5-78 by any book-maker or a race club. The provisions of sec.194 BB are applicable in the case of resident as well as non-resident tax-payers. The rates for deduction of tax at source for the financial year 1978-79 have been prescribed in part II of the schedule to the Finance Act, 1978 and are as follows: i. In the case of person other than company: a. where the person is resident---- 34.5% (IT 30% +4.5%) b. where the person is not resident---34.5% (IT 30% + 4.5%) ii. In the case of a company: a. where the company is a domestic----- 23% (IT 22% + SC 1%) b. where the company is not a domestic-- 73.5% (IT 70% + 3.5%) 3. The receipts by way of deduction of tax at source from winnings from horse races have been estimated at Rs.3.5 crores during the current financial year. Besides this being a new provision it is necessary that a close supervision and control is exercised over its implementation. You are therefore requested to make necessary arrangements for ensuring that the bookmakers and the race clubs deduct the tax at source regularly and pay the same to the credit of the central government within the prescribed time, namely within one week from the date of deduction or the date of the receipt of challan. ITOs may also be instructed to supply an adequate number of challans to the bookmakers/race clubs within their respective jurisdiction. In particular a quick survey may be conducted with a view to identifying the persons responsible for paying the tax from winnings from horse races so that a proper watch can be kept over the timely deduction and payment of tax by such persons and also the timely receipt of the prescribed quarterly statement in form no.26 BB and its proper scrutiny by the ITOs concerned. 4. In order to watch the progress of collections, the Board has decided that the Monthly Additional Information statement may be amended as follows: i. after present item(d) under the sub-head "2 deduction at source" of major head "020" corporation tax add new item (e) "Deduction from winnings from horse races u/s.194 BB"; ii. the present items e to g under the sub-head ibid may be re-numbered as f to h; iii. similarly under the sub-head "Deduction at source" of major head 021 taxes on income other than corporation tax after item (e) add new item (f) Deduction from winnings from horse races u/s.194 BB; iv. re-number the present items f to h under the sub-head referred to at iii above as g to i. 5. Apart from the monthly Additional information statement the statement of budget estimates of receipts refunds to be sent to the board for the periods ending 31st July, 30th September and 31st December should be amended to provide an additional item under both the major heads 020-corporation tax and 021 - taxes on income other than corporation tax after item 6 and 7 respectively, showing "Deduction from winnings from horse races u/s.194 BB to be numbered as item 6A and 7A respectively. The DCRs should also be amended by adding an additional column for recording the collections under Deduction from winnings from horse races so that a proper source record is maintained for recording the collections.