NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Tax Provisions for Special Cases
Mr. Rahul Mehta, a resident individual, receives a lottery prize of Rs 10,00,000 after paying a ticket cost of Rs 500. Ignoring surcharge and cess, what is the tax on this income?
The tax is Rs 3,00,000, being 30% of the full Rs 10,00,000 prize. The Rs 500 ticket cost cannot be deducted from lottery winnings, so deducting it, which gives Rs 2,99,850, is incorrect. Surcharge and cess are ignored here.
- ARs 3,00,000Correct
- BRs 2,99,850
- CRs 2,00,000
- DRs 3,30,000
Explanation
Lottery winnings are taxed at a flat 30% on the gross amount with no deduction for the ticket cost. 30% of Rs 10,00,000 is Rs 3,00,000. Rs 2,99,850 wrongly deducts the cost of the ticket.
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