IPL Taxation: How Players and BCCI Handle Taxes in India?

The Indian Premier League (IPL) is one of India's most major sporting event, drawing millions of fans and raking in huge revenue every year. The league is a significant income source for players and the Board of Control for Cricket in India (BCCI). However, many may be curious about the tax implications associated with the earnings from the IPL. In this article, we’ll discuss in detail how the income earned from IPL by players and the BCCI is taxed.

How Much Tax Do IPL Players Pay?

The taxation implications of income earned from IPL will vary for Indian and foreign players. Let’s understand in detail below:

Indian Players

The income earned by Indian players is considered professional income, and the franchise must deduct TDS at 10% while paying the amount to the players. The income earned by the players from IPL will be taxed at their slab rates.

Example: If Mr. VK receives Rs. 30,00,000 from an IPL team, and his additional income amounts to Rs. 15,00,000, the team will pay him Rs. 27,00,000 after deducting a 10% TDS. Mr. VK's total tax liability would be Rs. 10,81,600. Since Rs. 3,00,000 has already been deducted as TDS, he would need to pay an additional Rs. 7,81,600.

Foreign Players

Foreign players will be taxed under Section 115BBA of the Income Tax Act at a flat rate of 20% on their earnings from participation in the tournament, advertisements, and related activities in India. The franchise must deduct TDS at 20% while paying the foreign players. However, foreign players can benefit from Double Taxation Avoidance Agreements (DTAA) between India and their home countries. These agreements prevent double taxation by offering tax credits or exemptions.

How Much Tax Does BCCI Pay on IPL Income?

The BCCI is not required to pay income tax on the income it earns from the IPL, as it is considered a charitable organisation under Indian law. This is due to its nature as a non-profit organisation that promotes cricket in India. Concerns about the exemption, however, have arisen over BCCI’s commercial activities, particularly the IPL, due to its profitability. BCCI has faced challenges to its status, but the high court has confirmed that it retains the tax exemption and is not required to pay taxes on revenues from broadcasting rights, sponsorships, and other sources related to the IPL.

Conclusion

The taxation for Indian players, foreign players, and BCCI are different for the income earned from the IPL. Indian players are taxed based on their income tax slabs, with a 10% TDS deduction on their earnings. Foreign players, on the other hand, are subject to a flat 20% tax rate under Section 115BBA of the Income Tax Act, but they have the benefit of Double Taxation Avoidance Agreements (DTAA) to avoid being taxed twice on the same income. As for BCCI, it enjoys tax-exempt status as a charitable organisation, allowing it to avoid paying income tax on the income generated from the IPL. 

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