Tds

This query is : Resolved

Pushkar Gupta (Querist)
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23 September 2011 Query / confusion regarding deduction of TDS

A organization is working with Social Entrepreneurs, identifies and incubates innovations by supporting them technically & financially and help them in successfully marketing their products.
To encourage social innovations & entrepreneurship, give Villgro Award which recognizes & facilitates individuals & organizations. Also, give awards to students during student programs. Awards ranges from 10K to Rs.4Lacs.

Can you please let me know, if any TDS is applicable on Awards.

Looking forward for your reply.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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24 September 2011 Awards are taxable and rewards are not taxable. Awards are given in form of money and rewards in form of kind.

Award is given as token of appreciation to a person's achievement in a particular field. It has nexus between skills of a person and achievement. Reward is for a contribution made by a person for a return. Compensation given can also be reward.
2. A Person receives awards for the Best Actor - award- appreciation of his skills and achievement in the field.
3. money received from Police for catching a robber- reward
4. Prize amount received in competitions -not an award.
Recognition and not monetary payment is the soul of an award. It needs to be renowned.For eg. Ashok Chakra, Gallantary Award etc., whereas prize amount is more important (rather than the nomenclature) in case of reward.
In my view award/reward is taxable as income from other sources under the Income Tax Act.
However following is the exemption u/s 10(17A):
In case of award
Any award instituted in public interest by CG/SG or by any other body and approved by C.G in this behalf
In case of reward
Rewards by CG/SG for such purposes as approved by CG in this behalf.

CG Central Government
SG State Government

http://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2009ITAct/sec_010%2817A%29.htm

The above link shall help you to locate exempted awards.

Scholarship and awards, etc
Any kind of scholarship granted to meet the cost of education is exempt from tax under Section 10(16). Similarly, certain awards and rewards, etc. are completely exempt from tax under Section 10(17A), for example, Lakhotia Puraskar of Rs 100,000 awarded to the best Rajasthani author, every year under Notification No. 199/28/95-IT (A-I) dated 22-4-1996.

Any daily allowance received by a Member of Parliament or by an MLA or any member of any Committee of Parliament or State legislature is also exempt from tax under Section 10(17).