Introduction
Section 115BBA provides the tax rates at which income of non-resident sportspersons, sports organizations, etc., who/which is not a citizen of India would be charged and tax would be collected in advance at the time of payment. It also covers the applicability of income tax on income received or receivable by non-resident and non-national sportsmen, sports collaborations, and people who fall within the entertainment industry.
Applicability of Section 115BBA of the Income Tax Act
The following Income received by the non-resident sportsperson (athlete) foreign national who is also not a citizen of India will be qualified for taxation under Section 115BBA of the income tax:-
- Income by way of taking part in any Indian game (except victory in crossword enigma, running competitions, which shall include horse race competitions, etc.)
- Income by way of commercial advertisements.
- Income by way of contribution to systemizing magazines concerning the basic idea of gaming regulation and the growth of the sports industry.
Applicability of Section 115BBA to Non-Resident Sports Association or Organization
Section 115BBA of the Income Tax Act covers the taxability of income of a non-resident sports collaboration or organization in the context of any game (except victory in crossword enigma, etc.) or concerning any Indian sport that will also come under its purview.
Rate of tax under Section 115BBA of the Income Tax Act
Such income of a Non-Resident who is also a Non-Citizen of India shall be chargeable to tax at 20%.
Crucial Aspects of Section 115BBA of the Income Tax Act
One should consider the following significant points in the context of Section 115BBA of the Income Tax Act:-
- Restriction upon the Additional Deduction
- The standards of this Act impose a restriction on the deduction of any expenses or allowance in calculating the income of the sportsman, organization, or entertainer mentioned above.
Exemption from the filing of return under Section 139
If the below-mentioned conditions are satisfied, non-resident sportsmen, organizations, or entertainers are not required to file their income return under this Section.
- If total income which is assessable under this act contains only income covered under this Section ;
&
- TDS has been deducted under Section 194E.
For Example:-
During FY 2022-23, Chris, a foreign national, received a cash prize of Rs 10 Lakhs for participating in an Indian cricket competition. He also received Rs 2 Lakhs for writing incredible articles for the competition magazines. The local newspaper later published these articles, which were in line with the basic idea of gaming systems.
A soft drink branding corporation granted him Rs 5,00,000 for his performance in the TV ads. The sponsors will take care of all expenditures, but he had to spend Rs 5, 00,000 traveling to India. He was a non-resident concerning his tax liability in India. What will be his tax liability for the Assessment Year 2023-24?
“Does he need to file an income tax return, even if TDS is deducted from the total income ?
Answer:-
Chris received three different payments described below. The 1st payment was of Rs 10, 00,000, which he received as a cash prize for winning the cricket competition. The 2nd payment was for Rs 2, 00,000, which he received for his help and support in bringing to light the cricket magazines in the local newspaper. The 3rd payment was for Rs 5, 00,000, which he received for his performance in a soft liquid branding corporation.
Under Section 115BBA, all three payments received by Chris will be chargeable to tax at 20% on the gross ground. Surcharges & Cess i.e. 4% is also applicable on the amount of tax. No expenses can be set off with these payments. The overall tax duty operates to be Rs 3, 53,600, i.e., 20.8% of Rs 17 Lakhs.
Chris will need not to file an income return as:
- his overall income during the prior year contains only of income mentioned above,
- TDS has been deducted on such income.
Conclusion
Section 115BBA systemizes in accordance with the regulations of the Income Tax Act, of 1961.
It prepares a layout for fixing the tax amount on the income received by:
- sportsman, sports organization/enterprise; or
- An Entertainment Industry Employee
Laws and regulations of 115BBA govern the taxation of sportspersons’ income in an organized format. It also lays out standards concerning the exemption from filing income returns in specific cases.
Section 115BBA depicts the provisions similar to the restrictions imposed upon additional deductions in certain special cases. It manages the operation of prohibiting extra deductions comprehensively.
How can Sorting Tax help you?
You can freely contact our legal consultants at Sorting Tax. We provide every kind of professional advice or support in the context of Section 115BBA the Income Tax Act. Our team of professionals always strives to provide the best services when it comes to filing income returns.
Related Blogs:
Section 115BA of Income Tax, 1961
Presumptive Income- Section 44ADA Income Tax Act
