Income tax on income from lottery, competition: No income goes untaxed in India! Of course, there are some exemptions provided by the tax department to give relief to people in low-income categories. Tax liability increases as the person starts earning more. In case of a win from lotteries, the tax you will have to pay may surprise you. 

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As per the Income Tax rules, money won in a lottery or any competition is taxable. You will have to pay a flat 30 per cent of the winning amount and there is no basic exemption limit. 

So, if you have won Rs 1 crore in income tax, you will have to part ways with 30 per cent of it - that is whopping Rs 30 lakh! 

In case you have Rs 1 lakh, you will have to pay Rs 30,000 as tax. 

The Income Tax department says "such winnings  (from lottery or competition) are liable to flat rate of tax at 30% without any basic exemption limit."

Lottery or competition winners have to deduct TDS from the winnings and take home the balance amount. "In such a case the payer of prize money will generally deduct tax at source (i.e., TDS) from the winnings and will pay you only the balance amount," says Income tax department. 

The Tax department suggests people to maintain proof of earning from every source to stay out of trouble. "​​For every source of income you have to maintain proof of earning and the records specified under the Income-tax Act," says Tax department. 

"In case no such records are prescribed, you should maintain reasonable records with which you can support the claim of income," it adds.