Section 194E TDS on Payments to non-resident sportsmen or sports associations

As per section 194E: Where any income referred to in section 115BBA is payable to a non-resident sportsman (including an athlete) or an entertainer who is not a citizen of India or a non-resident sports association or institution, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of twenty per cent.

Summary of Section 194E of the Income Tax Act

• Deductor/ Payer: Any person
• Deductee/ Payee:
  • Non-Resident Sportsman (including an athlete)
  • An entertainer who is not a citizen of India
  • Non-resident sports association or institution
• Nature of Payment: Any income referred to in section 115BBA (See below section 115BBA)
• Threshold Limit: Any amount
• Rate of TDS:
  • TDS is required to be deducted @ 20 %
  • Cess @ 4% will be extra added in the above rate i.e. 20+0.80= 20.80%
• Time of deduction: Deductor is required to deduct TDS within earlier of the following dates:
  • At the time of credit of such income to the account of the payee or
  • At the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode

• Section 15BBA of the Income Tax Act:
  (1) Where the total income of an assessee, —

(a) being a sportsman (including an athlete), who is not a citizen of India and is a non-resident, includes any income received or receivable by way of—

(i) participation in India in any game (other than a game the winnings wherefrom are taxable under section 115BB) or sport; or
(ii) advertisement; or
(iii) contribution of articles relating to any game or sport in India in newspapers, magazines or journals; or

(b) being a non-resident sports association or institution, includes any amount guaranteed to be paid or payable to such association or institution in relation to any game (other than a game the winnings wherefrom are taxable under section 115BB) or sport played in India; or

(c) being an entertainer, who is not a citizen of India and is a non-resident, includes any income received or receivable from his performance in India,

the income-tax payable by the assessee shall be the aggregate of—
(i) the amount of income-tax calculated on income referred to in clause (a) or clause (b) or clause (c) at the rate of twenty per cent; and
(ii) the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the amount of income referred to in clause (a) or clause (b) or clause (c) :

Provided that no deduction in respect of any expenditure or allowance shall be allowed under any provision of this Act in computing the income referred to in clause (a) or clause (b) or clause (c).

(2) It shall not be necessary for the assessee to furnish under sub-section (1) of section 139 a return of his income if—

(a) his total income in respect of which he is assessable under this Act during the previous year consisted only of income referred to in clause (a) or clause (b) or clause (c) of sub-section (1); and
(b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.