Will Olympic players have to pay tax on prize money? Know the rules, will Olympic players have to pay tax on prize money? Know the rules
Olympic Gold Medalist Neeraj Chopra
- The prize money awarded to an Olympic medalist is tax exempt.
- Prize money given to players who do not win medals is not tax free.
- 30 percent tax is to be paid on the prize money.
Neeraj Chopra created history by becoming the first Indian to win a gold medal in athletics and accolades and awards are pouring in for him. Other winners of Silver and Bronze were also honored with back pats and money. Now these players have become completely rich, people like you and me are adding to the prize money given to these players. Being a tax freak, I thought of checking the taxability of the rewards that all these players get.
Are such rewards tax-free in cash or kind?
Section 10(17A) of the Income Tax Act, authorizes the Central Board of Direct Taxes (CBDT) to declare certain awards made in the public interest by the Central and State Governments to be tax free. This provision is in the book of law w.e.f. 01-04-89, CBDT on 28-01-2014 to make tax free cash or goods received as prizes to any medal winners in Olympic Games, Common Wealth Games and Asian Games. Order passed.
Under Section 10 (17A) of Income Tax, tax exemption is given only on the awards given by the Central Government and the State Governments to the sportspersons. Awards declared by other authorities like local authority, sports authority or an industrial house etc. are not tax free. Hence, for Neeraj Chopra, a prize like SUV announced by Anand Mahindra is not tax-free and he will have to pay 30% tax out of his pocket unless Mahindra is also generous enough with respect to tax on the value of the SUV.
Interestingly, the prize money paid by any state government to an Olympic medalist is exempt and not just the state government from which the medalist comes. Hence, Neeraj Chopra will be completely exempted not only from the prize money of Rs 6 crores announced by the Haryana government, but also 2 crores announced by the Punjab government and 1 crore by the Manipur government.
To whom is it exempt and for whom it is taxable
The CBDT order clearly states that only the medal winner is exempted from the prize money. Therefore, the award of Rs 50 lakh to nine players of the Indian women’s hockey team from Haryana, announced by the Haryana government, will not be tax free as they are not winners of any medals. Similarly, the prize money received by the coach of these players, even the prize money announced by any government, will not be tax free.
Tax Rates and Tax Deducted at Source
Prize money which is not exempt from tax as per the rules mentioned above. They will have to pay tax at the same rate of 30%. The person paying the prize money in cash is required to deduct 30% tax at source. In case of prize in kind, either the player will have to pay the TDS amount to the person giving the prize in kind. Alternately, the prize payer in kind may offer such prize money so that the player does not have to pay taxes out of his own pocket.
I am sure this article has quenched your thirst for knowledge about taxing prize money for Olympians.
(This article is written by Balwant Jain. He is the guest author. Opinions expressed are personal.)
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