State Govt faces backlash for deducting 30% TDS on cash rewards given to sportspersons:

Reward or Windfall? Odisha’s Sports Champions Face a Massive 30% Tax Deducted at Source The Odisha government has been taking a big chunk of money from the cash rewards it gives to top sportspersons. These athletes are losing 30% of their prize money because the government is treating their rewards like lottery or game winnings, which are taxed at a high rate. Many athletes have raised concerns about this, as the money is being taxed under Section 194B of the Income Tax Act, which applies to winnings from things like lotteries, crossword puzzles, and gambling. For the past few years, the Sports and Youth Services department has been giving out these cash rewards only after cutting 31.2% from the total 30% as tax under Section 194B and the rest as surcharge. The section 194B of IT Act states 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.” One interesting thing to note is, the Central Board for Direct Taxes has given approval to the decision under section 10(17A)(ii) of the Income Tax Act. As per the decision, any payment done in the form of cash or kind will not be taxed if it is received from the central or state government or through the medal winners of the Olympic games, Asian games or Commonwealth games. In other states, such as neighbouring West Bengal, governments transfer the incentive money directly to the sportspersons without deducting tax upfront. This allows the athletes to declare the amount as professional income under Section 194J of the Income Tax Act during their own income tax assessment. But Odisha takes a different approach, deducting 31.2% as tax at the time of payment, forcing the athletes to deal with complications afterwards. The father of a young athlete said he has filed multiple requests with the Income Tax department during annual assessments, but the system keeps rejecting them because the incentive was paid under Section 194B. Many sportspersons are upset that the reward for their years of dedication is being taxed the same way as winnings from gambling, TV game shows, and lottery games. A top athlete of the state has said that “It’s kind of insulting that the incentive of the Odisha government is viewed as a lottery and a crossword puzzle by the department itself.” He had raised the issue with the department before, but nothing came of it. A mountaineer has recently won Rs. 2 lakh. She said, "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." The Sports and Youth Services department consists of a strong award system that provides motivation to athletes who shine at national as well as international levels and bring glory to the country ans state. In national games, champions rewarded with gold, silver and bronze medals are given Rs 6 lakh, Rs 4 lakh and Rs 3 lakh respectively. An expert said, cash rewards to the champions in the form of lottery, crossword puzzles, fantasy sports, gambling, TV shows and card games are counted under 194B of the IT Act, and the TDS is 30 pc. He further added, "According to section 10(17A)ii of the 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."