CASUAL INCOME AND TAX TREATMENT

 


CASUAL INCOME-Defined

Section 56(2)(ib) states that income by way of "winnings" from the following sources shall be chargeable to income tax under the head "Income from Other Sources":

  • Lotteries: Including government or private lotteries, or schemes where prizes are distributed by draw of lots.

  • Crossword Puzzles: Competitions where prizes are awarded for solving puzzles.

  • Races including Horse Races: This covers all types of races, but horse racing is specifically mentioned.

  • Card Games: Such as Poker, Rummy, or any other card-based competition.

  • Other Games of any sort: This is a "basket clause" that includes TV game shows (like KBC), sports betting, or any competition based on skill or luck.

  • Gambling or Betting: Of any form or nature whatsoever.

TDS for Casual income:

 

 

l.Lottieries

a) Upto Rs.10,000

b) Above Rs.10,000

 

No TDS

30 % TDS

2. Horse Race Winnings

a) Upto Rs.10,000

b) Above Rs.10,000

 

No TDS

30 % TDS

3) Winning from others Races, Gambling or Betting

No TDS

TAX TREATMENT 

Grossing Up

Grossing Up is the process of converting the Net Income (the amount you actually received in your hand) back to the Gross Income (the total amount earned before Tax Deducted at Source/TDS).

Rules for Grossing Up

i)                    If net winnings are given

Gross Winnings = Net Winning X

ii)                  If gross Winnings are given

No need to gross up and take the amount given

Practical Sums

1. Mr.Karthick received the following income during 2024-25.Compute his income under the head Income From Other Sources separately for each case.

a)      Winnings from Sikkim Lottery Received –Rs.1,25,000

b)      Winning from Horse Race (Amount won) – Rs.20,000

c)      Winning from Cross word puzzles             -Rs.5,000

Solution

 

Rs.

a)      Winning from Sikkim Lotteries

1,25,000/(100-30)x100

b)      Winning from Horse Races

c)      Winnings from Crossword puzzles

 

1,78,521

 

20,000

5,000

        

2,03,521

            


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