TDS on payment to Non-Resident Sportsmen

Introduction

The world of sports has gone global, and athletes and sports associations are no longer limited to their respective countries. Non-resident sportsmen and sports associations have become so common in sporting events and tournaments worldwide. However, when it comes to making payments to non-resident sportsmen and sports associations, Indian taxpayers need to be aware of their tax implications. The Indian government has laid down rules and regulations regarding the TDS (Tax Deducted at Source) on payments made to non-resident sportsmen and sports associations. In this blog, we will explore the TDS on payment to non-resident sportsmen/ associations in detail and understand the process.

TDS on Payment to Non-Resident Sportsmen/Sports Association

When a person or entity makes a payment to a non-resident sportsman or sports association, they are required to deduct TDS from the amount paid. The rate of TDS on payment to non-resident sportsmen and associations is determined by the Income Tax Act, 1961, and is subject to change from time to time.

As per the current rate, the TDS on payment to non-resident sportsmen and sports associations is as follows:

• 10% TDS on the amount paid as professional fees or earnings from sports events in India.
• 20% TDS on the amount paid as endorsement fees or earnings from advertisement and other commercial activities in India.

It is important to note that the rate of the Tax Deducted at Source on payment to non-resident sportsmen and sports associations may vary based on the tax treaty between India and the NRI’s country. If a tax treaty exists, it supersedes domestic tax laws, and the rates prescribed under the treaty will apply.

Who is Liable to Deduct TDS?

The person or entity making the payment to a non-resident sportsman or sports association is liable to deduct TDS. It is important to note that the responsibility of deducting TDS lies with the person or entity making the payment, and not the NRI recipient. In case of non-compliance with TDS rules, the Indian taxpayer may face severe consequences such as penalties, interest, and disallowance of expenses.

Procedure for TDS on Payment to Non-Resident Sportsmen/Sports Association

The method for TDS on payment to non-resident sportsmen and sports associations is similar to that of TDS on payment to any other non-resident. The process involves the following steps:

Step 1: Obtain a Taxpayer Identification Number (TIN)

The person or entity making the payment to a non-resident sportsman or sports association must obtain a Taxpayer Identification Number (TIN) from the Income Tax Department. The TIN is a unique identification number assigned to every taxpayer registered with the Income Tax Department.

Step 2: Determine the Rate of TDS

The person or entity making the payment must determine the applicable rate of the Tax Deducted at Source on payment to the NRI sportsman or sports association. The rate of TDS depends on the type of payment made and the tax treaty.

Step 3: Deduct TDS and Issue a TDS Certificate

The person or entity making the payment must deduct TDS on the amount paid as per the applicable rate and issue a TDS certificate to the NRI sportsman or sports association. The TDS certificate must be issued within 15 days from the due date of filing the TDS return.

Step 4: File TDS Return

The person or entity making the payment must file a TDS return with the Income Tax Department. The TDS return must be filed quarterly and contains details of the TDS deducted and deposited.

Step 5: Obtain a Tax Residency Certificate (TRC)

The non-resident sportsman or sports association may apply for a Tax Residency Certificate (TRC) from the tax authorities of their country of residence. The TRC is a certificate that certifies the non-resident’s country of residence and is used to avail of the benefits of a tax treaty, if any, between India and the non-resident’s country.

Conclusion

In conclusion, TDS on payment to non-resident sportsmen and sports associations is a crucial aspect that taxpayers must consider while making payments. The Indian government has laid down rules and regulations regarding the TDS (Tax Deducted at Source) on payment to NRI sportsmen and sports associations. It is essential to comply with these rules to avoid any penalties or consequences. Taxpayers must determine the applicable rate of TDS and follow the procedure for TDS on payment to non-resident sportsmen and sports associations. By following these guidelines, taxpayers can ensure compliance with the law and avoid any legal hassles.