Do Winners of National Film Awards Pay Income Tax on Cash Prizes? Know the Facts

Every year, the National Film Awards celebrate the best of Indian cinema. For many recipients, winning such an award is the highest honor of their career. Beyond the applause and recognition, these awards also come with cash prizes. Naturally, one question arises for winners: is this prize money taxable?

The answer depends on whether the award is a government-recognized honor or a private award given by an organization or event. The rules are not only clear in law but also rooted in the principle of distinguishing between recognition of public service and income from private or commercial ventures.

Why National Film Awards Are Tax-Free

The 71st National Film Awards, which included honors from the prestigious Dadasaheb Phalke Award to the various Swarna Kamal and Rajat Kamal awards, fall squarely within the exemption provided by Section 10(17A) of the Income Tax Act, 1961

This provision exempts from income tax:

1. Any award instituted in the public interest by the Central or State Government.
2. Awards approved by the Central Government that are set up by other bodies.
3. Rewards given by Central or State Governments for purposes deemed to be in the public interest.

The National Film Awards are run by the Directorate of Film Festivals under the Ministry of Information and Broadcasting. They were created to honor artistic achievement in cinema in the public interest. Because they meet all the conditions of Section 10(17A), the cash prizes attached to these awards are fully exempt.

So, when actor Mohanlal received the Dadasaheb Phalke Award with a prize of Rs. 10 lakh, or when Shah Rukh Khan and Vikrant Massey shared the Best Actor Award under Rajat Kamal, receiving Rs. 1 lakh each, they owed no tax on those amounts

This exemption applies across categories, whether it is the Best Feature Film winner receiving Rs. 3 lakh under Swarna Kamal, or a technical awardee receiving Rs. 2 lakh under Rajat Kamal.

How Other Awards Are Taxed

The situation is very different for non-government awards. Popular ceremonies such as the Filmfare Awards, IIFA Awards, Zee Cine Awards, and Screen Awards are organized by private entities. These are not government-recognized or approved under Section 10(17A).

The prize money from such awards is treated as “Income from Other Sources” under Section 56(2) of the Income Tax Act. They are taxed at a flat rate of 30% plus 4% health and education cess, bringing the total to 31.2%

This means if a celebrity wins Rs. 10 lakh at a private awards show, about Rs. 3.12 lakh would go in taxes.

To make compliance smoother, the government introduced changes in the 2025 Budget. From April 2025, Tax Deducted at Source (TDS) applies only if a single award exceeds Rs. 10,000. Earlier, the rule was based on the annual aggregate of winnings

This change reduces the burden of frequent small TDS deductions.

Why the Distinction Exists

At first glance, one might wonder why a national award is tax-free while a Filmfare award is taxed so heavily. The reasoning lies in the purpose of the award.

Government awards like the National Film Awards are intended to encourage excellence in cinema and are given in the public interest. Taxing such recognition would go against the policy objective of promoting artistic and cultural contributions.

By contrast, commercial awards and entertainment prizes are more about recognition within private or industry circles and are considered a form of income.

This distinction is consistent across the board. For example, cash rewards given by governments to Olympic athletes are also tax-free and winnings from game shows like Kaun Banega Crorepati are fully taxable at the 31.2% rate.

For winners of the 71st National Film Awards, the tax impact is simple:

• No tax liability on the prize money.
• No TDS deduction by the government.
• No need to report it as taxable income in their income tax return.

For recipients of private awards, the approach is different. They must:

• Account for the prize under “Income from Other Sources.”
• Pay the 31.2 percent tax rate on the prize amount.
• Maintain TDS certificates if tax is deducted by the organizers.

Historical Consistency

This tax exemption is not new. In the past, awardees like Vidya Balan, who won the National Award in 2011, also received their prize money tax-free. The Central Board of Direct Taxes (CBDT) regularly updates and publishes lists of government-approved awards to clarify exemptions. On the other hand, private awards have consistently been taxed, and courts have upheld this classification.

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