When you win a lottery prize in Bhutan, the amount you see on the prize structure is the “Gross Prize.” However, the amount you take home is the “Net Prize” after taxes are deducted. Understanding these deductions is crucial for all players, both within Bhutan and across the border in India.
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1. The Standard Tax Rate: 20% TDS
In Bhutan, lottery winnings are treated as “Income from Other Sources.” According to the Income Tax Act of the Kingdom of Bhutan, a flat tax rate is applied to lottery winnings.
- TDS Rate: 20%
- Method: This is a Tax Deducted at Source (TDS), meaning the lottery department (BLL) will subtract the tax amount before handing over the prize money to you.
2. The Tax-Exemption Threshold: Nu. 5,000
Not all winnings are taxed. The government provides a small relief for winners of smaller prizes.
- Prizes up to Nu. 5,000: These are Tax-Free. If you win Nu. 4,500, you will receive the full Nu. 4,500.
- Prizes above Nu. 5,000: The 20% TDS is applicable on the entire winning amount.
Example Calculation:
- If you win Nu. 1,00,000:
- Tax (20% of 1,00,000) = Nu. 20,000
- Net Payout = Nu. 80,000
- If you win Nu. 10,000,000 (1 Crore Bumper):
- Tax (20% of 10,000,000) = Nu. 2,000,000 (20 Lakhs)
- Net Payout = Nu. 8,000,000 (80 Lakhs)
3. Taxation for Indian Winners
Since Bhutanese lotteries are very popular in India (especially in West Bengal and Assam), Indian winners must understand the cross-border tax implications:
- Deduction in Bhutan: First, the 20% TDS will be deducted by Bhutan Lottery Limited in Phuentsholing.
- Tax in India: When you bring this money into India, it is considered foreign income. However, India and Bhutan have a Double Taxation Avoidance Agreement (DTAA).
- Reporting: You must report this income while filing your Income Tax Return (ITR) in India. You may be able to claim credit for the taxes already paid in Bhutan to avoid paying tax on the same amount again in India. Consult a Chartered Accountant (CA) for high-value wins.
4. Important Compliance Rules
To ensure your tax is processed correctly and you receive your payout:
- PAN Card/ID: Indian winners must provide their PAN Card and Aadhar/Passport. Without these, the tax processing can be delayed.
- Tax Certificate: Always ask Bhutan Lottery Limited for a TDS Certificate. This is your legal proof that the tax has been paid to the government, which is essential for your bank and tax authorities.
- The 60-Day Rule: You must claim your prize and complete the tax formalities within 60 days of the result. If you fail to do so, the prize (and the tax revenue) is forfeited.
5. Where Does the Tax Money Go?
The 20% tax collected from lottery winnings is a vital source of revenue for the Royal Government of Bhutan. It is used to fund:
- National Healthcare: Free medical services for Bhutanese citizens.
- Education: Development of schools and skilling programs for the youth.
- Infrastructure: Building roads and bridges in the mountainous terrain of the country.
-: Conclusion :-
While paying 20% in taxes might seem like a lot, it is a legal requirement that ensures the lottery remains a transparent and beneficial industry for the nation. Whether you win big or small, always play through authorized channels to ensure your winnings are legal and your taxes are handled correctly.
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