Money or rewards from govt: Media experiences counsel that French medalists will obtain Rs 80,000 for gold, Rs 40,000 for silver, and R s20,000 for bronze from their govt – however tax shall be withheld. In distinction, Indian athletes take pleasure in a greater deal, as money or items from govt are tax-free.
Central Board of Direct Taxes (CBDT) clarified in a 2014 notification that rewards from the central or state govts to Olympics, Commonwealth, or Asian Video games medalists are exempt beneath Part 10 (17A) of Earnings-Tax (I-T) Act.
Manu Bhaker, who gained two medals at Paris Olympics, and Sarabjot Singh have been awarded Rs 30 lakh and Rs 22.5 lakh, respectively, beneath the reward scheme of ministry of youth affairs and sports activities – these are prone to be tax free. Indian hockey crew’s rewards from Punjab and Odisha state govts shall be tax exempt too.
In 2018, the Earnings Tax Appellate Tribunal dominated that Rs 96 crore awarded in combination to shooter Abhinav Bindra, India’s first particular person Olympics gold medalist, was tax exempt because the awards have been from govt.
Is worth of the medal taxable?
Till just lately, the US taxed all its medal winners on worth of their medals along with rewards.
Nevertheless, since 2016, owing to Appreciation for Olympians and Paralympians Act, athletes are solely taxed on these if their annual earnings exceeds $1 million. India’s tax legal guidelines do not explicitly deal with the taxation of sports activities medals, and the judiciary hasn’t tackled the problem both.
Gautam Nayak, tax companion at CNK & Associates, notes that the important thing query is whether or not a medal constitutes jewelry. He argues it would not, as it is not a each day wearable merchandise like a gold chain or necklace. Part 56(2)(x) of I-T Act states that movable property (as outlined and specified) with out consideration the place combination worth exceeds Rs 50,000 is taxable. For figuring out “specified items” one turns to the definition, which covers land, buildings, shares, securities, and jewelry – a medal wouldn’t fall in any such class, Nayak says.
Money or items obtained from personal events (together with employer): “Beneath I-T Act, items obtained in extra of Rs 50,000 (in combination) are taxable beneath the top ‘Earnings from Different Sources’ – worth of a gift-in-kind would should be declared as earnings and could be taxable on the relevant I-T slab charges,” says Amarpal Singh-Chadha, tax companion and India mobility chief at EY-India. Some industrialists with the intention to encourage sports activities, do give away items in sort – say a flat or a automobile. As Nayak explains, going by the definition defined earlier a present of a automobile could escape tax.
Some employers give items be it in money or sort to workers who gained a medal. Singh-Chadha provides, “Any present supplied by an employer is taken into account as a perquisite (the place the worth exceeds Rs 5,000). It’s added to the worker’s wage and the worker pays tax on the relevant slab price towards his taxable earnings. The employer can also be chargeable for deducting tax at supply (TDS) accordingly.”
In keeping with Nayak an alternate view could possibly be that the present was in appreciation of the worker’s efficiency on the video games and never associated to his employment. Thus, it could not be taxable as wage – however as earnings from different sources. On this context, as defined earlier, some items in sort might escape tax in the event that they fall exterior the required definition.
Worldwide tax comes into play: “If an Olympics medalist earns sponsorship earnings in France in the course of the Paris Olympics 2024, the implications beneath India-France tax treaty must be analysed. Such earnings earned in France shall be topic to tax in France as per its native tax legal guidelines and aid for double taxation, if any, will be claimed by the sportsperson,” says Singh-Chadha.
