Understanding Tax Obligations: Last Friday, the registration for the 16th season of the popular game show Kaun Banega Crorepati (KBC), hosted by Amitabh Bachchan, kicked off in India.
In India, game shows and fantasy sports have consistently attracted large audiences due to the potential to earn substantial amounts of money.
KBC started this trend by offering participants the chance to win significant cash prizes.
In the wake of KBC’s success, other television channels introduced similar high-stakes shows such as Big Boss, MTV Roadies, and Dance India Dance.
Furthermore, the recent surge in internet connectivity has led to the popularity of online games such as Rummy, Poker, and Dream 11.
Winnings tax obligations
Players of Dream11 and KBC should note that their winnings are taxable.
According to Manikandan S, a tax expert at ClearTax, “The Income Tax Act classifies game show and online game winnings as income, taxable at 30%.”
Under Section 194BA, the tax is deducted at source before the net winnings are paid out.
Game show income tax rules
India’s tax implications on prize money are as follows:
- According to section 194B of the Income Tax Act, prize money exceeding Rs 10,000 is subject to TDS at 31.2%.
- For horse races, TDS is applicable if the prize exceeds Rs 10,000.
- Such income cannot be deducted for expenses or allowances.
- It is not possible to deduct winnings from your income tax under sections like 80C or 80D.
- The basic exemption limit and slab rates do not apply; winnings are taxed at a flat rate of 31.2%.
Also Read: US Senate to Vote on Child Tax Credit Expansion
In India, prize money received in kind is taxed as follows:
- A prize distributor must ensure that the tax on the prize’s market value is paid if a prize is given in kind (e.g., a car).
- A 31.2% tax is imposed on the prize’s market value.
- A prize distributor can either recover the tax from the winner or pay it directly.
- For prizes consisting of both cash and in-kind, tax is calculated on the total value (cash plus market value of in-kind prize); the tax is deducted from the cash portion.
- The winner or distributor must pay the deficit if the cash portion does not cover the tax.
What are the tax implications of winnings from games like KBC and Dream11?
These winnings are reported as “Income from other sources” on income tax returns.
Manikandan emphasizes the importance of keeping proper documentation and records, including the TDS certificate.
Winnings must also be reported in ITR-1 for incomes up to Rs 50 lakh, and in ITR-2 for incomes over Rs 50 lakh.
Multiple rulings from the Punjab and Haryana High Court, Bombay High Court, Rajasthan High Court, and the Supreme Court of India have established the legality of FS as a game of skill rather than chance.
In FS, success depends on one’s ability to select teams based on players’ real-time performances in live matches,” said Joy Bhattacharjya.
Sports betting is prohibited by the Public Gambling Act of 1867, but FS is distinguished by its skill-based nature.
According to Bhattacharjya, “this distinction has allowed Fantasy Sports to thrive legally within the Indian framework, supported by studies from prominent institutions like IIM Bangalore, MIT, and Columbia.”
Also Read: Inheritance Tax Explained: Understanding How It Works in Countries Like the US
