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Applicability of tds

CA. MUKESH KUMAR (CHARTERED ACCOUNTANT) (183 Points)

26 October 2012

Dear Friends,

Please help me on the applicability of TDS on below mentioned case:

Award made by A to B for the exemplary work cariied out by B in the field of charity.

A is a organisation who evaluate the work of NPOs and give award money, on the basis of

work carried by NPO, to the winner. Is it coverd under section 194B ??? In my opinon it is not covered by same as it not

a winiing from any lottery or crossword puzzle or car game or other game of any sort .

Thanks

Please mentioned relevent section \notification no. etc.

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2 Replies

@VaibhavJ (Believe!! Live your dreams!) (33516 Points)
Replied 26 October 2012

U/s194B definitely not to deduct TDS.

Rgds//Vaibhav

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YAshwi (Risk Analyst) (141 Points)
Replied 26 October 2012

'For the purpose of section 194B, lottery includes winning from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever, under any scheme or arrangement. by whateveer name called.'

Hence, the essential elements to constitute a lottery is -

1) must involve a prize, whether cash or kind;

2)participants have paid or agreed to pay a valuable consideration for the privelage in participating in the scheme or arrangment.

3) Must involve an element of chance or drawing of lots

Hence, any transcation involving specific skills for winning a prize or any advantage in the nature of prize cannot be termed as a lottery to attract provisions of sction 194B.

Accordingly, prize given voluntarily to the NGO based on their contribution to the society can be considered as a prize given by chance or upon draw of lots. It is specific to the skills of the NGO.

Hence, section 194B is not applicable here.

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