TAX ON PRIZE MONEY (GRANT)

[MINU SALILA]

Hi All,

Recently I won a competition and received a grant of 10 Lakhs as prize money. I would like to know how the taxation will be.

The prize was announced in January 2024 and amount got credited in June 2025. So which financial year will be considered for taxation. 2024-2025 ? or 2025-2026?

Also what percentage need to be paid as tax and based on what criteria?

Thanks in Advance.

AI Summary

Taxability of prize grants: classify as winnings, capital receipt, or business income to determine tax treatment and deductions.
Income is taxable in the year received under the assessee's accounting method; with cash accounting and receipt credited in June 2025, the amount is taxable in FY 2025-26. If characterised as winnings, it is Income From Other Sources and taxed at a flat special rate with surcharge and cess, and no deductions are allowed; TDS is typically deductible by the payer and creditable against tax liability. If the payment is a capital grant for establishing a business it may be non taxable as a capital receipt, but if it is revenue support it will be business income taxed at normal rates with allowable deductions.