Tax on lottery wins
patter
(Querist) 11 September 2015
This query is : Resolved
1. Suppose a person wins Rs 1 crore prize (e.g, Kerala lottery). The Government of Kerala deducts 30% (Rs 30 lacs) of the lottery prize as income tax. But after that, it deducts 10% (Rs 10 lacs) as agency commission for the winning ticket. The winner actually gets Rs 60 lacs. He is paying tax for the agency commission too which is illegal, I believe. What the winner should get is Rs 90 lacs and tax is payable (Rs 27 lacs) only on this amount. Am I right? (I don't know if any winner has ever filed an IT return reclaiming this extra amount. Normally, winners, thrilled that they have won the prize, keep quite).
2. The agency commission is ethically and legally a business expense which should be borne by a business entity (in this case, the Dept of Lotteries)and not by the winner. The buyer of a ticket is never informed in advance or at the time of buying that he has to bear this expense. Nor is there any document displayed publicly for this. Only after he gets the ticket in hand does he get a chance to read the conditions on the reverse of the ticket, that too printed in microscopic font. Does not this violate the Indian Contract Act? Then, is he not entitled to Rs 70 lacs?
3. Are there separate Tax laws for lottery that validate this kind of strange logic and deduction?
(A blank receipt which the winner should sign is enclosed)
Guest
(Expert) 11 September 2015
Are You the Winner of Kerela Lottery Then you You would afford to Contact the Local Good Senior Advocate For all this.
R.K Nanda
(Expert) 11 September 2015
consult tax lawyer.
Guest
(Expert) 11 September 2015
There is nothing like supposing any on winning a lottery and facing a problem, which you have asked the experts to suppose. Discuss the real problem, if you have any. So far as the law is concerned, there is no logic in supposition or presumption.
If you are a winner of 1 crore and have really faced such a problem, you must consult a tax practitioner to get your problem solved, as if you have even received 60 lakhs out of 1 crore, I don't think you have any reason to be so miser to seek free advice on your presumption based query.
Even otherwise, commission to agent is the liability of the organisers of lottery, not the winner. However, if that condition is specifically mentioned on the back of the lottery ticket to be borne by the winner or reference of some set of other terms is given, only then lottery winner is liable to pay. In that case the buyer of the lottery ticket would need to refer such specified terms.
Rajendra K Goyal
(Expert) 11 September 2015
Obtain form 16 / certificate of TDS from the department, file the return and get refund for the excess paid tax from the IT department.
For commission to agent refer concerned state lottery rules.
H.M.Patnaik
(Expert) 18 March 2016
Agree with Mr. Goyal.
