The Ministry of Home Affairs asked for opinion on the payment method of lottery prize rewards in the Parliament on Monday. The ministry asked the Department of Revenue, Ministry of Finance to express its views on the matter.
According to a report by PTI, the ministry wants to implement that the reward amounts from lotteries be paid through official banking channels in an attempt to achieve more transparency in the process. It believes the move will help keep a check on tax evasion and money laundering.
Minister of State for Finance Pankaj Chaudhary informed the Parliament through a written statement that the home affairs ministry has also asked the state governments, along with the revenue department to provide their views on the matter.
Currently, the winnings from a lottery or a crossword puzzle and commission on lottery tickets sales are subject to Tax Deduction at Source (TDS), under section 194B and 194G of the Income Tax Act.
The Finance Act, 2023 amended section 194B of the Income Tax Act to include gambling or betting of any type whatsoever under the gambit of TDS. The threshold for the same is an aggregate amount exceeding Rs 10,000 during the financial year for the TDS to be deducted, the report noted.
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Taxpayers are generally expected to declare income from sources like online competitions, lottery draws, etc. under the ‘Income from Other Sources’ section in their income tax returns. Post the deduction of TDS, a flat tax rate of 30 per cent is levied on any winnings from lotteries or competitions.
Chaudhary assured the Parliament that the I-T department adopts a stern stance in tax evasion cases and does its due diligence properly. It ensures to conduct a proper investigation if it receives any valid information or intelligence regarding violations of tax laws by any taxpayer.