29 Jan 2016 Jonas Lemberg

Easwar committee recommends increasing TDS limit for gaming winnings to Rs. 15,000

Gambling winning tax

Exclusive A committee headed by Justice (retd.) RV Easwar has recommended increasing the threshold limit for Tax Deduction at Source on winnings from gambling, lottery, card games, prize competitions or other games to Rs. 15,000/- from the existing threshold limit of Rs. 10,000/- in its draft report. The government of India had vide a notification in October 2015 established a high level committee headed by retired Delhi High Court judge, Justice Easwar to recommend simplification of income tax provisions.

The committee in its recommendations has also asked for clubbing of the provisions relating to winnings from horse racing with Section 194B of the Income Tax Act, 1961 dealing with card games by merging Sections 194B and 194BB. The committee has also recommended that a flat tax rate of 30% TDS be mentioned in Section 194B.

The committee recommendations if adopted by the government will provide some minor relief to poker, rummy and other skill games players who have to grapple with exorbitantly high taxation rates, but will not give much respite as the tax rate of 30% is not likely to be lowered by the government.

Media reports indicate that the government is seriously contemplating implementing the committee recommendations and will introduce the necessary legislative changes to the Income Tax Act, 1961 in the upcoming budget.

Following is the legislative amendment to Section 194B proposed by the Easwar committee:

(C) Winnings from lottery or crossword puzzle or from horse race. (Newly drafted Section effective from 1.6.2016) 194B.

(1) The person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle or card game or other game of any sort or from gambling or betting of any form or nature whatsoever, as referred to under section 115BB, an amount exceeding fifteen thousand rupees shall, at the time of payment thereof, deduct income-tax thereon at the rate of thirty per cent: Provided that in a case where the winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings.

(2) Any person, being a bookmaker 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, as referred to under section 115BB, an amount exceeding fifteen thousand rupees shall, at the time of payment thereof, deduct income-tax thereon at the rate of thirty per cent.

(D) Section 194BB relating to “Winnings from horse race” is recommended to be deleted w.e.f. 1.6.2016 because it has been recommended that these provisions be merged in section 194B

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