How is prize money taxed in India?

Question

I have won a programming competition based in US, and i will be getting $800 from the US based company. They are telling me that they will pay the taxes already and will give me the full amount. Now, would i have to pay special 30% tax to Indian govt. also?

I've searched over internet but could not reach any conclusion. From what i have researched, there is DTAA b/w India and US, and i believe my earning will be regarded as prize money and will be eligible for special 30% tax. Also i am a resident of India and i am a student who never paid tax earlier.

I think the tax can be avoided under DTAA? Can someone please tell the procedure or tell me where i am wrong? Also what is the best way to not pay double tax as paying company is already paying taxes to US govt.

Dheer · Answer

programming competition based in US, and i will be getting $800 from the US based company.

Ensure that this is not a scam.

I've searched over internet but could not reach any conclusion. From what i have researched, there is DTAA b/w India and US, and i believe my earning will be regarded as prize money and will be eligible for special 30% tax. Also i am a resident of India and i am a student who never paid tax earlier.

Prize money is taxed at highest tax bracket irrespective of the income; this is currently around 34%. Under DTAA you can claim the benefit of taxes paid in the US. So effectively you may have to pay additional 4% tax in India as 30% is already paid in US. Please apply for a PAN card so that you can file the appropriate returns.

How is prize money taxed in India?

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