Taxation of gifts & awards received by Sportsman & awards instituted by Central Government, State Government or other bodies

 2,185 total views

Taxation of gifts & awards received by Sportsman & awards instituted by Central Government, State Government or other bodies

 

SECTION 10(17A) OF THE INCOME-TAX ACT, 1961 – AWARDS – AWARDS INSTITUTED/APPROVED BY THE CENTRAL/STATE GOVERNMENT UNDER CLAUSE (17A) FOR THE PURPOSE OF EXEMPTION OF PAYMENT MADE IN PURSUANCE THEREOF – CLARIFICATION ON TAXABILITY OF AWARDS FOR SPORTSMEN

 

 CIRCULAR NO. 2/2014 [F.NO.199/01/2014-ITA.I]

 

The Central Board of Direct Taxes had issued Circular No. 447 (hereinafter called “the Circular”) on 22nd January, 1986 clarifying that awards received by a sportsman, who is not a professional, will not be liable to tax in his hands as the award will be in the nature of a gift and/or personal testimonial.

  1. The said Circular was applicable in a tax regime when gift was not taxable in the hands of the recipient and with the fundamental change in the manner of treatment of gift by amending the definition of income under sub-section (24) of section 2 by introduction of sub-clauses (xiii), (xiv) and (xv) therein and insertion of clauses (v), (vi) and (vii) in sub-section (2) of section 56 of the Income-tax Act, 1961 (‘Act’), the gifts became taxable in the hands of recipient w.e.f. 1-4-2005. The said Circular No. 447 had therefore become inapplicable with the change in law and is to be treated as overridden by the aforesaid statutory provisions w.e.f. 1-4-2005.
  1. Further, in terms of provisions of clause (17A) of section 10, Central Government approves awards instituted by Central Government, State Government or other bodies as also the purposes for rewards instituted by Central Government or State Government from time to time. Tax exemption can be sought by eligible persons in respect of awards or rewards covered by such approvals.

Leave a Comment

Your email address will not be published.

the taxtalk

online portal for tax news, update, judgment, article, circular, income tax, gst, notification Simplifying the tax and tax laws is the main motto of the team tax talk, solving