Section 194B: TDS on Winnings from Lottery, Game Shows etc…

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TDS shall be deducted on winnings from lottery, game shows and puzzles by the prize distributor.

1.  Applicability: Winning amount needs to be more than Rs 10,000

2.  Deductor: Prize distributor can be any person and shall deduct the TDS at the time of  payment

3.  TDS Rate: TDS at a flat rate of 30% shall be applicable on such income.

4.  Nature of Win: Winning can be in form of cash or kind. TDS needs to be deducted on both these components. Market value of the prize needs to be assessed and tax needs to be deducted on the assessed amount

5.  Points to Note:

    • TDS u/s 194B shall be deducted on the net winnings i.e. after considering bonus/commission paid to lottery agent
    • Deduction/expenditure shall not be allowed on such income to the prize recipient
˜Authored by – CA Anushka Saraogi˜

Section 194N – TDS on Cash Withdrawals

Useful guidelines to avoid common mistakes while submitting TDS Statements

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Following are some useful guidelines to avoid common mistakes, while submitting TDS Statements and you are requested to go through the following in detail.

Incorrect reporting of 197 Certificates:

Please refer to the following guidelines for correct reporting of 197 Certificates:

  • The Certificate Number should be of 10 digits with Alpha-numeric structure. Please refer to the following examples:
      • Correct Format 1111AA111A;
      • Incorrect Format: 1111AA111A/194C
    • Certificate Number should be valid during the period for which it is quoted.
    • The Certificate Number should be for the same PAN, Section Code and Section Rate for which it has been mentioned in the statement
    • Threshold limit Amount of the Certificate should not be exceeded.
    • Please ensure that the Certificate is not expired. Please refer to the following illustration:
      • Lower deduction Certificate under section 197, issued in April 2013 (e.g. Certificate Number-1) stands cancelled by Assessing Officer on 10/11/2013.
      • A fresh certificate Under Section 197 (e.g. Certificate Number-2) is issued with effect from 11/11/2013.
      • Deductor quotes Certificate Number-2 against the transactions recorded during the period from 01/11/2013 to 10/11/2013 in Q3 TDS statement.
      • Deductor should have quoted Certificate Number-1 for the transactions conducted till 10/11/2013.

Common errors resulting in Short Payment Defaults:

  • Typographical errors committed by deductor, in reporting the date 20032014    in the Tax Deducted column.
  • Total of Amount Paid / Credited reported in the Tax Deducted column of the statement. This results in short payment and Deductors need to ensure that the TDS/TCS Deducted/Collected amount should be equal to TDS/TCS Deposited Amount.

The above mistakes are illustrated below:

Amount Paid/ Credited

TDS Deducted

TDS Deposited

Remarks
1,55,000.00 1,55,000.00 15,500.00 Wrong TDS Deducted Amount
2,20,420.00 20032014.00 22042.00 Date mentioned in the TDS Deducted Column

 Actions to be taken:

  • CIN Particulars (BSR Code, Date of Deposit and Challan Serial Number) mentioned in the TDS statement should exactly match with the CIN Particulars as available on Challan Status at www.tdscpc.gov. in or Challan Status Enquiry at www.tin-nsdl.com
  • For BIN (Book Identification Number), the particulars (24G receipt number, Date of transfer voucher and DDO Serial Number) mentioned in the TDS statement by the Govt. Deductors should exactly match with the BIN Particulars as available on Challan Status at www.tdscpc.gov. in or BIN View at www.tin-nsdl.com
  • Amount of Tax deposited pertaining to different BINs/ CINs should not be clubbed together while reporting in the TDS statements.
  • Few other common mistakes in reporting dates are as follows:

Actual Date of Deposit 
(As per Challan)

Date of Deposit mentioned in TDS Statement

Observations
07/01/2014 (07th Jan 2014) 07/01/2013 (07th Jan 2013) Wrong Year (2013 instead of 2014)
07/01/2014 (07th Jan 2014) 01/07/2014 (01st July 2014) Wrong Date Format (MM/DD/YYYY)

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Late Payment Intimation – reasons & how to resolve?

Late Payment Intimation – reasons & how to resolve?

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In the TDS Return filed, the intimation for Late Payment can be received for the following reasons: 

Case #1: There was a delay in payment of TDS dues for which interest was not paid before filing TDS Return 

Case #2: The interest component was present in the Challan, but the ‘interest was not allocated’

Case #3: Challan was paid on time, but owing to some error in the ‘date of deduction / payment’ in the corresponding deductee record(s) 

Procedure to handle the Late Payment intimation: 

Case#1: Interest not paid

  • Make the payment of the interest using ITNS 281 Challan for the amount as per the intimation
  • This Challan needs to be added online through TRACES
  • While adding this Challan through TRACES, make sure that apart from the amount of the Challan, the interest amount is also to be entered under ‘Interest Allocation’ – this is very important
  • Once successfully done, it will take 24-48 hours for the Challan to be visible in TRACES 

Case #2: ‘Interest not Allocated’

  • The interest now needs to be allocated against the Challan(s) through TRACES
  • In TRACES, identify the Challan, and place the interest amount under ‘Interest Allocation’ – needless to say, there should be enough balance in the Challan for this allocation
  • Once successfully done, it will take 24-48 hours for the modified Challan(s) to be visible in TRACES

Case #3: Error in ‘Date(s)’ in Deductee Records

  • The incorrect ‘Date(s)’ in the Deductee Records needs to be rectified by preparing a Correction Statement
  • This Correction Statement needs to be filed
  • Once successfully done, it will take around 24-48 hours for acceptance

Consequences of TDS defaults