Q.A private company organised a marketing contest and gave a cash prize to the winning customer, describing it as an 'award'. Separately, the State Government gave a cash award, in the public interest, to a citizen for an act of exceptional bravery. Discuss the tax treatment of both receipts with reference to Section 10(17A).

Not every payment called an 'award' qualifies for the Section 10(17A) exemption — its source and purpose matter.

Under Section 10(17A), any payment made, whether in cash or in kind, as an award instituted by the Central Government or a State Government (or by any other body approved by the Central Government) in the public interest, is exempt from tax. The State Government's cash award for an act of exceptional bravery squarely fits this description — it is instituted by a Government body and given in the public interest — and is therefore exempt under Section 10(17A). The private company's marketing-contest prize, by contrast, is not instituted by the Government or an approved public body, and is not given in the public interest; it is a promotional payment to a customer and does not qualify for the Section 10( …

Assuming any payment LABELLED an 'award' is automatically exempt — the exemption under Section 10(17A) turns on the award being instituted by Government (or an app …