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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Tax Provisions for Special Cases

Ms. Anita Rao, a resident individual, has a net taxable income of Rs 8,00,000 under the old regime, which includes Rs 40,000 of income from lottery winnings. Which statement about this winnings component is correct?

The Rs 40,000 of lottery winnings is taxed at a flat 30%, which is Rs 12,000. Neither the basic exemption limit nor Chapter VI-A deductions can be set against it. The remaining income is taxed separately at the normal slab rates.

  1. AIt is added to the other income and taxed at slab rates
  2. BIt is taxed at 30% and its basic exemption shortfall can be adjusted
  3. CIt is taxed at 30% and no basic exemption or Chapter VI-A deduction can be set against itCorrect
  4. DIt is exempt because the total income is below Rs 10,00,000

Explanation

Lottery winnings are taxed at a flat 30%, here Rs 12,000. The basic exemption limit and Chapter VI-A deductions are not available against such income. Other income is taxed separately under the slabs.

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