TaxTMI 
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TaxTMI 
Modernizing TDS for Horse Racing : Clause 393(3)[Table: S.No. 3] of Income Tax Bill, 2025 Vs. Section 194BB of the Income-tax Act, 1961
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....me. This commentary provides a detailed analysis of the new provision, elucidates its objective and structure, examines its practical implications, and critically compares it with the existing law u/s 194BB, highlighting continuities, changes, and potential areas of ambiguity or concern. Objective and Purpose The legislative intent behind Clause 393(3)[Table: S.No. 3] is to ensure efficient collection of taxes on winnings from horse races at the point of payment, thus minimizing tax evasion and improving compliance. The provision is crafted to keep pace with evolving forms of betting and wagering, technological advancements in payment mechanisms, and the need for clarity regarding the threshold for TDS applicability. The threshold and pro....
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.... horse racing or for arranging wagering/betting in a race course. This ensures that only those operating within the legal framework are subject to TDS obligations. * Nature of Income: Only winnings from horse races are covered. The language is clear and unambiguous, avoiding overlap with other forms of gambling or betting, which are covered separately in Clause 393(3)[Table: Sl. No. 1]. * Threshold Limit: TDS is to be deducted only if the winnings from a "single transaction" exceed Rs. 10,000. This is a significant point of interpretation and is a departure from the earlier regime, which, at various times, considered aggregate winnings in a financial year. * Rate of Deduction: The deduction is to be made at "rates in force." This typi....
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....takeholders * Bookmakers and Licensed Operators: The provision imposes a clear and direct compliance obligation. They must monitor the threshold for each transaction, deduct tax at the prescribed rate, and remit the same to the government. They are also required to issue TDS certificates to winners and file TDS returns, with significant penalties for non-compliance. * Winners: For recipients, the provision ensures that tax is deducted at source, reducing the risk of subsequent demands or penalties. However, winnings below the threshold escape TDS, though they remain taxable in the hands of the recipient. * Tax Authorities: The provision simplifies enforcement by making the point of payment the locus of compliance. However, the focus o....
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....aces. * Threshold Limit: Both set the threshold for TDS at Rs. 10,000 per single transaction. * Rate of Deduction: Both require deduction at "rates in force." * Timing of Deduction: Both require deduction at the time of payment. 3. Key Differences and Evolution * Legislative Clarity and Harmonization: Clause 393(3) is part of a broader, harmonized TDS framework, consolidating various TDS provisions into a single clause with unified tables for different types of payments. Section 194BB stood as a standalone provision. * Threshold Specification: Earlier versions of Section 194BB referred to "aggregate of amounts during the financial year," which could trigger TDS if cumulative winnings exceeded the threshold. The 2025 amendment and....
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....where in the new Bill. 5. Comparative Table Feature Section 194BB of the Income-tax Act, 1961 (Pre-2025) Clause 393(3)[Table: S.No. 3] of the Income Tax Bill, 2025 (Post-2025) Payer Bookmaker or licensed person Bookmaker or licensed person Recipient Any person Any person Nature of Income Winnings from horse race Winnings from horse race Threshold Rs. 10,000 (aggregate in FY; earlier versions) Rs. 10,000 (single transaction) Rate Rates in force Rates in force Time of Deduction At time of payment At time of payment Procedural Integration Standalone Integrated with unified TDS framework Exemptions Not explicit Explicitly listed in Clause 393(4) Practical Implications 1. For Payers (Bookm....