BHUBANESWAR: A strange tax deduction practice of the Odisha government is drilling a hole in the pockets of champion sportspersons, leaving them poorer by 30 per cent of the financial incentives they receive from the state. For, their income is taxed as earning from gaming, lottery and crossword puzzle.
Many sportspersons have been complaining about it since the tax deducted at source (TDS) is computed at 30 per cent rate as provided under section 194B of the Income Tax Act.
For the last couple of years, the Sports and Youth Services department has been releasing cash incentives after effecting a 31.2 per cent deduction - 30 per cent as specified under 194B of IT Act and the rest towards surcharge.
The section 194B of IT Act stipulates that “the person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle or card game and other game of any sort in an amount exceeding Rs 10,000 shall, at the time of payment thereof, deduct income-tax thereon at the rates in force.”
Interestingly, the Central Board for Direct Taxes has approved under section 10(17A)(ii) of the IT Act that any payment received in cash or in kind will be tax-free if it has come from the central or state government, or received by medal winners of the Olympic games, Asian games or Commonwealth games.
In other states, including neighbouring West Bengal, the governments make the incentive remittances directly to the winning sportspersons allowing them to work out their IT assessment using section 194J of IT Act towards professional tax. However, Odisha has been following a different route, deducting it at source at 31.2 per cent after which the sportspersons run from pillar to post.
Father of a young athlete said he has been making several applications to the IT department during annual assessment but the system does not accept it since the incentive remittance is made under 194B of IT Act. Most sportspersons, though, are irked by the fact that the reward for their hardwork of years is labelled as ‘gaming, crossword puzzle, television game show and lottery’.
“It’s kind of insulting that the incentive of the Odisha government is viewed as lottery and crossword puzzle by the department itself,” said a top athlete of the state, unwilling to be named. He took up the matter in the past with the department but in vain.
A young mountaineer from the state recently won Rs 2 lakh. “Before getting the cash award, I had planned to give Rs 1 lakh to my father and purchase a two-wheeler for our family which is poor. However, I was surprised to know more than Rs 60,000 was deducted from the cash award. The deduction was very big for my family,” she told this paper.
The Sports and Youth Services department has a robust cash award system to encourage athletes who excel at both national and international levels and bring laurels for the state and country. The government rewards gold, silver and bronze medallists of National Games with Rs 6 lakh, Rs 4 lakh and Rs 3 lakh respectively.
Chartered accountant Manoranjan Panigrahi says cash received from lottery, crossword puzzles, fantasy sports, gambling, TV shows and card games come under 194B of IT Act and the deduction at source is 30 pc.
“According to section 10(17A)ii of Income Tax Act, the awards and rewards received by the professional sportspersons from the central or state governments or on behalf of the government are not subject to tax” he added.
Secretary, Sports and Youth Services department Bhaskar Jyoti Sarma did not respond to queries on this.