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The 2025 IPL auction created headlines with record-breaking deals for several players. Rishabh Pant's Rs 27 crore contract with Lucknow Super Giants, spanning three years, is a prime example. Similarly, Mitchell Starc's acquisition by Delhi Capitals for Rs 11.75 crore adds to the financial spectacle of the league. However, these significant earnings come with significant tax implications, varying greatly depending on the player's residential status and nationality. The Indian tax system differentiates between resident and non-resident players, applying distinct tax rates and procedures.
For Indian players like Rishabh Pant, their IPL income is considered professional income, added to their overall yearly earnings. This total income is then taxed according to the applicable marginal income tax slab rates. For high-earning players, this typically translates to a 30% tax rate, along with additional surcharges and cess. The deduction of expenses related to their profession is also permitted. A 10% Tax Deducted at Source (TDS) is applied at the time of payment. In Pant's case, with a three-year contract worth Rs 27 crore, the tax deduction would amount to approximately Rs 8.1 crore (30%), resulting in a net salary of around Rs 18.9 crore over the three-year period. The risk of injury is factored into the contract; Pant will receive full payment if injured during the IPL, but the franchise can substitute him if injured before the tournament begins.
Foreign players, like Mitchell Starc, are classified as non-residents for tax purposes due to their limited time in India during the IPL. They are subject to the provisions of Section 115BBA of the Income Tax Act, 1961. This section imposes a flat 20% tax rate on their total income from sources such as IPL contracts, endorsements, and articles published in Indian media. A 20% TDS is also applied upon payment. These players are not obligated to obtain a Permanent Account Number (PAN) in India. Double Taxation Avoidance Agreements (DTAAs) between India and the player's home country could provide additional tax benefits, preventing double taxation. The requirement of Form 15CB from a Chartered Accountant for payments exceeding Rs 5 Lakhs further underscores the complex tax procedures involved in handling foreign player payments.
The case of Vaibhav Suryavanshi, a 13-year-old cricketer with a Rs 1.10 crore contract, highlights the unique taxation of minors' income in India. The Income Tax Act distinguishes between earned and unearned income for minors. Vaibhav's IPL earnings constitute earned income, taxed under his PAN card, with his guardians responsible for tax compliance. Unearned income (such as interest or dividends) is generally clubbed with the higher-earning parent's income, with an exemption up to Rs 1,500 per child. However, if a minor's total income surpasses their parents', the unearned income is taxed individually. Since Vaibhav's income surpasses the basic exemption limit, he needs to file an Income Tax Return (ITR), with a parent or guardian acting as a representative assessee. The complexities of these tax regulations highlight the need for specialized professional guidance in managing the financial affairs of young, high-earning athletes.
In conclusion, the high-stakes world of the IPL brings with it a complex web of taxation rules and regulations. The significant earnings for players, both domestic and international, are subject to varying tax rates, TDS deductions, and additional compliance requirements. Minors, like Vaibhav Suryavanshi, face their own set of unique tax rules, highlighting the specialized nature of managing the finances of young, exceptionally talented individuals. The sheer scale of the IPL's financial transactions necessitates a thorough understanding of these regulations to ensure full compliance and efficient financial management for all stakeholders.