In this day and age, many national and international sports events are being hosted by India. As a result, it is crucial to know about tax implications on non-resident sportsman coming to India. The example of events being held: Common Wealth Games, Indian Premier League (IPL), Pro-Kabaddi League, Badminton League, and the list goes on and on.
When a non-resident sportsman comes to India for participating in the events and earns money from the same, then the major question that comes up is that – “which country has a right to impose a tax on such income”. Therefore, let us have a quick look at the tax implications on income earned by non-resident sportsmen coming to India under Income tax and GST law.
Tax Implications under Income Tax Law An individual is said to be a non-resident if none of the below condition is fulfilled:
He has stayed in India for 182 days or more during the relevant previous year; or
He stayed in India for 60 days or more during the relevant previous year and 365 days or more during the last 4 years preceding the relevant previous year.
Section 115BBA This section provides a special tax rate for the sportsman. He is a non-resident & non-citizen and has earned income by participating in any event, advertisement, or contribution of the article in any game or sport in India. The tax rate applicable to such an amount is 20%.
Section 194E A person who pays money to a non-resident sportsman (including an athlete), or an entertainer, or a sports association/institution is required to deduct TDS at the rate of 20% on such amount. Also, the deducted is liable to furnish the TDS Return in Form 27Q.
Section 10(39) The Central Government is authorized by section 10(39) of the Income Tax Act, 1961, to spared any international sporting event being organized in India from taxing. Such deviations are generally granted when the event being held is of international importance and managed by an internationally recognized body. Such relief was given to the World Cup conducted by the International Cricket Council (ICC), The Commonwealth Games New Delhi 2010 and, the F1 race event was held in Noida in the latter half of 2011.
Double Tax Avoidance Agreement (DTAA) Generally, non-resident sportsman lives outside but earn income in India. There is quite a possibility that the income earned by them may be taxed twice by both India and the resident country, leading to double taxation. To curb this situation, the Double Tax Avoidance Agreement (DTAA) was introduced. DTAA is a tax treaty signed between two or more countries that fix a specified rate at which TDS is essential to be deducted when a non-resident earns income in a country. As of now, India has DTAA with more than 80 countries.
Tax Implications under GST Law A non-resident taxable person under GST is a person who supplies goods or services or both occasionally, whether as an agent or a principal, but has no fixed place of business or residence in India. Accordingly, a foreign or foreign business/organization supplying goods/services would be considered a non-resident taxable person under GST.
GST Registration & Returns
A non-resident taxable person is mandatorily required to obtain registration under GST law, irrespective of the minimum threshold turnover limit prescribed. Form GST REG-09 must be filed to get the roster as a non-resident taxable person.
The registration should be obtained five days before the commencement of business, and the estimated amount of advance tax must be paid by the non-resident taxable person.
However, an option to opt for regular registration is there for sportsman if their stay in India is longer. In the case of normal registration, Form GST REG-01 is required to be filed.
For a person registered as a Non-Resident Taxable Person, GSTR-5 must be filed every month. On the other hand, GSTR-3B/GSTR-1 must be filed on a monthly/quarterly basis by the person who has obtained normal registration.
At AJSH, we assist our clients in dealing with various income tax compliances and GST matters, including income tax and GST assessments, GST registration, filing of ITR and GST returns, TDS returns, GST and tax advisory, claiming refund and other related services by providing them adequate support and guidance from our end. If you have any questions or wish to know more about Non-resident sportsman, kindly contact us.
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