Taxation of Indian & Overseas IPL Players

Income Earned by IPL Taxpayers

IPL players earn from multiple sources, making up a significant part of their overall income. Let’s explore these diverse revenue streams:

Base Salary/Auction Price

The assured amount for the season is determined by a player's performance, experience, and demand in the auction.

Match Fees

Match fees are paid in addition to the base pay for each match played. The amount is calculated based on the number of matches a player participates in.

Prize Money

Prize money includes earnings from an IPL trophy win, ‘Man of the Match,’ ‘Orange Cap,’ ‘Purple Cap,’ and other performance-based bonuses.

Advertisements and Brand Collaborations

Cricketers are no less than celebrities, so they also get a lot of advertisements and collaboration opportunities. It includes advertisements, promotions, brand ambassadors, and social media partnerships.

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How is the Income of IPL Players Taxed?

The IPL players can be classified into two categories, Indian players and overseas players. The taxation of both Indian players and overseas players is different. In other words, the taxability of IPL players depends on their residential status and the applicable tax laws.

Residential Status

• Indian players are considered residents of India for tax purposes, which makes their worldwide income subject to tax in India.
• Foreign players are classified as non-residents for Indian tax purposes due to the limited time they spend in India during the IPL season.
• Before receiving the payment, players have to sign a tripartite agreement with both BCCI and the franchise. If the franchise does not make the payment, BCCI will make the payment and deduct the amount from the franchise’s Central Revenue Fund.

Taxation for Indian Players

Indian players are generally considered resident taxpayers under the Income Tax Act. Income from match fees, endorsements or base salary of Indian players might be taxed under the head Income from Business and Profession or Income from Other Sourcesm depending on the nature of income earned. Franchises or agencies deduct TDS @10% on income under section 194J of the Income Tax Act while making payments.

Taxation for Overseas Players

Accordingg to section 115BBA, any income earned by overseas sportsman is taxable in India at a flat rate of @20% without claiming deduction for expenses. The scope of income covered under this section includes -

• Participation in any game or sport in India.
• Advertisement earnings in India
• Contribution of articlesrelated to any game or sport in Indian newspapers, journals or magazines.

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Benefits of Double Tax Avoidance Agreement (DTAA)

The overseas players can also take the benefit of DTAA or Double Taxation Avoidance Agreement between India and home country. DTAA ensures that the foreign players playing in IPL are not subjec to double taxation. These players earn significant amount from sponsorphips, match fees, endorsements and advertisements during the tournament. The DTAA provisions mitigate the risk of being taxed in both India and the resident country of the overseas players. India has DTAAs with 90+ countries like Australia, new zealand, South Africa, England, New Zealand and West Indies.

When the IPL is played outside India. In such cases, overseas players may argue that since the tournament is held abroad, their IPL income for that year should be taxed in the host country instead of India.

However, franchises and agencies making payments to overseas players must deduct TDS. Under Section 115BBA of the Income Tax Act, TDS is deducted at 20% under Section 194E on such payments.

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Tax Compliances

Indian players, as resident taxpayers under the Income Tax Act, 1961, must file an income tax return in India under Section 139(1) and report their global income.

However, overseas players are not required to file an income tax return in India under Section 139(1) if:

• Their total income consists only of IPL-related earnings.
• TDS has already been deducted under Section 194E from such income.

This provision simplifies tax compliance for overseas players, provided TDS is correctly deducted at source.

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What is the Takeaway Salary of IPL Players?

The takeaway salary of taxapayers will depend on the overall income of the IPL players and the tax provisions applicable to them. The takeaway salary is the amount left with the player after taking into account or deducting the taxes payable as per the Income Tax Act.

For example, Lucknow signed Rishabh Pant for ₹27 crore for three seasons (2025, 2026, and 2027), meaning he will receive the amount in installments rather than a lump sum.

The Income Tax Department will deduct ₹8.1 crore as tax from his total contract, leaving him with a net salary of ₹18.9 crore over three years.

If Pant gets injured during the IPL, he will still receive his full payment. However, if he suffers an injury before the tournament (scheduled for March 2025) and is unable to play, the franchise has the right to replace him with another player.

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Taxation of Minor Cricketer Vaibhav Suryavanshi’s IPL Earnings

Vaibhav Suryavanshi, the 13-year-old cricketer from Bihar who secured an IPL contract worth ₹1.10 crore will also have to pay taxes on his income. Here’s how his income will be taxed -

Breakdown of His Taxation:

1. Earned vs. Unearned Income

• Earned Income – Income from personal skills, such as sports, acting, or business.
• Unearned Income – Income from passive sources like interest, savings, or parental investments.

2. Taxation of Vaibhav’s IPL Earnings

• His ₹1.10 crore IPL contract is earned income since it arises from his cricketing skills.
• Under Section 64(1A), earned income is taxed in the minor’s own name and not clubbed with a parent's income.
• Since his income exceeds the basic exemption limit, he must file an ITR and will be taxed as per individual slab rates.

3. Taxation of Unearned Income (if any)

• Any passive income (e.g., interest, dividends) would normally be clubbed with the parent’s income under Section 64(1A).
• However, if his total income surpasses his parent’s, it will be taxed in his own name.
• Parents can claim an exemption of ₹1,500 per child under Section 10(32) for such income.

ITR Filing & Compliance

• Vaibhav must file an ITR, with his guardian acting as the 'representative assessee'.
• His tax liability will be computed based on the income tax slab applicable to individuals.

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How is the Tax Liability of IPL Taxpayers Calculated?

IPL players earn income from multiple sources which can be related or unrelated to cricket. Here’s how the tax liability on income of an IPL player will be calculated -

Tax Calculation

Note: New effective tax rate in this case os 42.62%.

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