PAN may heal tax pains of foreign IPL players

New provision

“All foreign players, who are now playing in the IPL, are expected to obtain PAN card. In the absence of PAN, they will have to pay penal tax rate at the Tax Deducted at Source (TDS) level,” a highly placed source in the Central Board of Direct Taxes (CBDT) told Deccan Herald.

This is as per a new tax notification of the CBDT issued a few months ago, making PAN mandatory for all foreign nationals and non-residents, who make earnings in India.

Higher rate
If the assesses do not have PAN cards, TDS will be calculated at a higher rate of 20 per cent. Under normal circumstances, tax is deducted at 10 per cent at the TDS point.
The new provision relating to TDS under the Income Tax Act of 1961 will become applicable with effect from April 1, 2010.

This means the foreign nationals involved with IPL and not having a PAN card, will end up paying 20 per cent of their earnings as tax, the CBDT sources say.

The new provision will have to be read with section 115BBA of the Income Tax Act, which ‘ensures tax on non-resident sportsmen or sports associations, where the total income of the player, who is not a citizen of India and is a non-resident, includes any income received or receivable by way of participation in any game in the country’, they add.

The new provision also covers foreign sports commentators, umpires, team coaches, physiotherapists, TV anchors and sports columnists for their earnings in India.

“We assume that all the IPL franchises are aware of the new TDS rules on Income Tax. All these overseas individuals, who are in one way or the other making income through IPL-related activities and are not familiar with the Indian tax requirements, can be assisted by the organisers to get their PAN cards to avoid penalty,” the CBDT sources say.

The Income Tax Department is currently looking into the financial transactions of the franchises of the IPL to ascertain source of funding for bidding  as well as detect tax evasion, if any.

The third edition of IPL is now embroiled in controversies, including allegations about some Union ministers influencing the auction of IPL franchises.

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