Section 194E deals with the provisions of TDS deduction on payment to a non-resident sportsmen or sports association. According to the section 194E of the Income Tax Act, 1961, any person making payment of income referred to in section 115BBA of the Income Tax Act, 1961 to the following persons will be liable to deduct TDS –
- A non-resident sportsman (including an athlete); or
- An entertainer who do not have citizenship of India; or
- A non-resident sports association / institution.
When to Deduct TDS under Section 194E?
Income tax is to be deducted at the time of credit of this kind of income to the account of the payee or at the time of payment, whichever is earlier.
For this process, “payment” can be done in cash or by issue of a cheque or draft or by any other mode.
Who is responsible to deduct tax under section 194E?
Any person responsible for making following payment will deduct tax at source:-
| Payee | Nature of income |
| (a) Non – resident citizen sportsman (including an athlete) | Income is by way of- a) Participation in India in any game (other than card game or gambling, etc.); or b) Advertisement; or c) In newspaper, magazines or journals, contribution of articles relating to any game or sport in India |
| (b) Non – resident sports institution or association | Any amount guaranteed to be paid or payable in relation of any game (other than card game, etc.) or sport played in India. |
| (C )Foreign citizen entertainer who are non-resident | Income is from his/her performance in India. |
What is the Rate of TDS under Section 194E?
The rate of tax deduction u/s 194E is 20% (Plus Surcharge and Health & Education Cess @ 4%)
Extract of Section 194E- Income Tax Act, 1961
In section 194E, Where any income referred to in section 115BBA is payable to a non-resident sportsman (including an athlete) or an entertainer who is not a citizen of India or a non-resident sports institution or association, the person responsible for making the payment shall, at the time of credit of these kind of income to the account of the payee or at the time of payment through the mode of cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of twenty per cent.