Professional sportspeople may soon have to pay at least 10.3 per cent as tax on their match fees and money for endorsing corporate logos on their apparel and other gear.
The finance ministry is considering a proposal to bring sportspeople under the ambit of tax deducted at source. This may be announced in the Budget.
The move will be part of the ministry's attempt to broaden the coverage of TDS to boost tax collections and increase compliance.
The income tax department has sought an amendment to the definition of a "professional" in Section 194J of the Income Tax Act, 1961, to include sportspeople.
This provision already covers legal, medical, engineering, accountancy, technical consultancy and interior decoration professionals.
TDS is levied at 10 per cent, plus the education cess of 3 per cent, taking the total incidence to 10.3 per cent.
Endorsement money received by sportspeople is already subject to TDS.
A sportsperson will denote any individual engaged in a professional capacity or otherwise in any games or sports, or any event or organisation as a player, team manager, coach, match referee, umpire, groundsman, curator, administrator, physical trainer, physiotherapist, and psychologist, among others.
In effect, if a sportsman earns Rs 1,00,000 as match fees, the payer will deduct Rs 10,300 at source.
At the end of the financial year, the player can claim a refund on the amount deducted as part of his annual income tax return.
The new provision will imply that sports organisations like Board of Control for Cricket in India will have to subject all match fee or logo money to TDS.
At present, sports organisations do not deduct TDS under these two heads.
"This will imply an additional procedural requirement for domestic sports organisations like BCCI. However, if the payer is a foreign entity like Cricket Australia, then it will have to appoint an agent to comply with this provision," said Rahul Garg, executive director, PricewaterhouseCoopers.