Section 194E - SRV Associates

Introduction

Table of Contents

Section 194E addresses the provisions for TDS deduction on payments made to a non-resident athlete or sports association. According to Section 194E of the Income Tax Act of 1961, any person making a payment of income referred to in Section 115BBA of the

Income Tax Act of 1961 to the following persons is required to deduct TDS:

A non-resident sportsperson (including an athlete), or an entertainer who does not have Indian citizenship, or a non-resident sports association or institution.

Who is required to deduct TDS under Section 194E?

Any individual who is a non-resident sportsperson (including an athlete) or entertainer (who is not an Indian citizen), or If you pay money to a sports institution or an association, you must deduct tax at the source under Section 115BBA.

When Should TDS Be Deducted Under Section 194E?

Income tax is to be deducted at the time of crediting this type of income to the payee’s account or at the time of payment, whichever comes first.

“Payment” for this process can be made in cash, by cheque or draught, or in any other way.

Section 15BBA of the Income Tax Act states:

(1) Where an assessee’s total income –

(a) being a sportsman (including an athlete) who is not an Indian citizen and is a non-resident includes any income received or receivable as a result of –

I participation in any game or sport in India (other than a game whose winnings are taxable under section 115BB)

(b) Advertisement

(d) if 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 or sport played in India (other than a game the winnings of which are taxable under section 115BB)

(e) The assesses income-tax liability shall be the sum of I the amount of income-tax calculated at the rate of 20% on the income referred to in clause

(ii) the amount of income-tax with which the assessee would have been charged had the assesses total income been reduced by the amount of income referred to in clause

Provided, however, that no deduction for any expenditure or allowance shall be allowed under any provision of this Act in computing the income referred to in clauses

(2) It is not necessary for the assessee to file a return of income under sub-section

(1) of section 139 if –

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

Note:

● Section 194E makes no provision for deducting tax at a rate lower than the one specified above.

● In the case of a non-resident, the TDS rate shall include any applicable surcharge + Education Cess + SHEC.

● The DTAA has no effect on the obligation to deduct under Section 194E.

● Section 194E makes no requirement to determine whether income in the hands of the recipient is taxable in India. This is a section 195 requirement, not a section 194E requirement.

● Payments to resident umpires are covered by section 194J, while payments to non-resident umpires are deductible under section 195 if they are taxable in India in the hands of the non-resident umpire.