What Is Section 194E & Section 194EE Under Income Tax Act?

Section 194E: TDS on Payments to Non-Resident Sportsmen or Sports Association

India’s love for cricket can’t be defined by a single ‘word.’ Whenever there is a cricket match, whether involving the Indian team or IPL, the madness is clearly visible.

But have you ever wondered, how the income of many foreign players like Angelo Mathews, David Warner, etc, or even umpires, is taxed in India? Not only cricket, but many international players regularly visit India for tournaments in all sports like football, hockey, boxing, and the list is endless.

This is where Section 194E plays a vital role, as it specifically targets income earned by sportsmen, etc, in India.

Who is required to deduct TDS u/s 194E?

• Any person who
• Pays money to a non-resident sportsman (including an athlete) or an entertainer (who is not an Indian citizen), or
• Pays money to a sports institution or an association; an income as referred to u/s 115BBA is required to deduct tax at source u/s 194E.

What is Section 115BBA?

This section provides a special tax rate @ 20% (plus EC and SHEC), Plus a Surcharge as applicable on specified income arising from a Non-Resident Sportsman or Entertainer or Sports Association.

However, no deduction for any expenditure incurred and allowance is given to such assessee u/s 115BBA.

Specified income includes income from participating in any games/ sports/ performance, as well as income from advertising or income from contributing articles in the newspaper. All such income should arise only in India.

What is the rate & time of tax deduction u/s 194E?

The rate of tax deduction u/s 194E is 20%, exclusive of EC and Surcharge. And the time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft, or other modes).

Section 194EE: TDS on Payment for Deposit Under NSS

Section 194EE of the Income Tax Act, 1961, deals with Tax Deducted at Source (TDS) on payments made for deposits under the National Savings Scheme (NSS).

Who is required to deduct TDS u/s 194EE?

Any person who pays an amount under section 80CCA(2)(a), i.e., National Savings Scheme, to another person is required to deduct tax under this section.

What is the rate & time of tax deduction u/s 194EE?

The rate of tax deduction u/s 194EE is 10%, and the time of deduction is when the payment is made.

What is the rate & time of tax deduction u/s 194H?

The rate of tax deduction u/s 194H is 5%. And the time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft, or other modes).

No Requirement of TDS :

• When the amount paid (at once or total during the financial year) to the payee (i.e., the receiver) is less than 2500.
• No deduction when the amount is given to the heirs of the assessee.