During this lockdown, many of you might be playing online fantasy games and got a reward from the platform that you are playing or a got a reward from IPL bettings.
Know your income tax implications.
- Income tax to be paid on the entire amount that you won and no deduction of any expenditure or allowance shall be allowed
- Winnings are taxed at a flat rate of 30%, excluding cess. The net rate after cess amounts to 31.2%, without the benefit of the basic exemption limit. This means if your total income is below 2,50,000/- ideally, there is no requirement for you to pay tax, but if you have income from winnings then you are liable to pay tax @ 31.2% on the amount of the winnings.
- The platform paying out the winnings will need to deduct tax at source under section 194B of ITA if the winnings exceed INR 10000 per contest. Hence only if the total amount that you are receiving from the payer exceeds 10000 TDS will be applicable otherwise you have to pay tax only self-assessment at the time of filing of ITR.
- The TDS deducted by the platform will be displayed in FORM 26AS of the user. The user can take credit of the TDS while filing his/her income tax return. If you haven’t submitted PAN to the payer at the time of deducting TDS you cannot take credit of TDS while filing ITR.
- No deduction or expenditure Allowed. The crucial aspect is that income tax is to be paid on the entire winnings and no deduction in respect of any expenditure or allowance shall be allowed in computing the income by way of any winnings from fantasy sports games.
- If the winnings are in kind, value in kind exceeds 10000/-, the organizer will release the winnings only after ensuring that tax on winnings has been paid by you to the government
W.e.f 01.07.2021 (194Q), TDS at 0.1% is applicable on a purchase of goods exceeding Rs.50 Lacs in a year. The responsibility of deduction shall lie only on the buyer whose turnover exceeds Rs. 10 Crore during the previous year Proviso’s applicable!!!
TCS u/s 206C(QH) also applicable to the seller to deduct TCS @ 0.1% on an amount of sale of goods exceeding 50 lacs, if his turnover exceeds 10 crores during the previous financial year.
Hence having your turnover exceeding 10 crores, if you are purchasing goods of value more than Rs., 50 lacs in a year from any person, you are under obligation to deduct TDS @0.1% from the payment that you are making to that person in excess of Rs 50 lacs.
Example for 194Q
01. Buyer’s Turover is 11 crores,
Seller’s Turnover is 9 crores, Receipt or payment for the sale or purchase of goods in the previous year: Rs 55 lacs. TDS u/s 194Q applicable as Buyers Turnover during the previous financial year exceeds 10 crores. TDS u/s 194Q @0.1% is applicable on 5 lacs being an amount in excess of 50 lacs. (55 lacs-50 lacs). TCS u/s 206C(1H) not applicable as Sellers Turnover does not exceed 10 crores during the previous financial year.
02.Buyer’s Turover is 11 crores,
Seller’s Turnover is 12 crores, Receipt or payment for the sale or purchase of goods in the previous year: Rs 55 lacs. TDS u/s 194Q and TCS u/s 206C(1H) are applicable as the turnover of both buyer and seller during a previous financial year exceeds 10 crores.
Action required for TCS on Sale of Goods for Financial Year 2020-21
- In case, you are liable to collect TCS under Income Tax for sales of goods, ensure to pay TCS by 7th April (the due date is not 30th April) for Q4. The due date for TCS return is 15th April (and not 31st May).
- We need to reconcile the TCS receivable in Books with Form 26AS and pass the necessary entries.
Action for Financial Year 2021-22
- The rate of TCS is increased from 0.075% to 0.1% with effect from 1st April 2021
- In case, you had raised an invoice with 0.075% TCS and not received it before 31st March 2021, you may have to raise a Debit Note at 0.025%
- However, the TCS is not levied on the first Rs. 50 lakhs in a financial year. Accordingly, if the amount outstanding without TCS is Rs. 2 crores (or with TCS Rs. 2,00,15,000/-), then a Debit note is not required. You can adjust the TCS in the outstanding amount with the receipt above Rs. 50 lakhs.
- In case, the amount outstanding is more than Rs. 2 crores, then you may raise debit note at 0.025% on an amount exceeding Rs. 2 crore
