Understanding Tax Implications for Indian Athletes' Olympic Winnings

Taxability of Rewards Received by Olympic Medal Winners From Central and State Government

As per the CBDT approval order issued under section 10(17A)(ii) of the Income Tax Act, any payment received in cash or in kind will be tax-free if the following conditions are met -

• If the payment is received from the Central or State government
• If payment is received by medal winners of the Olympic games, Asian games, or Commonwealth games.
• If payment is received as a reward.

The exemption was applicable on rewards received after 28.01.2014.

Therefore, the reward received by any player winning a gold, silver, or bronze medal will be exempt from tax in the hands of the medal winner. The reward can be in cash or in kind. Reward in cash may be lumpsum or recurring in nature, like a lifelong pension to a medal winner. Such rewards will be tax-exempt whether he is an amateur or a professional sportsperson.

Examples of Awards and Rewards Not Covered Under Section 10(17a)(ii)

Given below are the examples of rewards/awards not covered under the CBDT exemption order -

• Rewards are received by Olympic medal-winners from sports NGOs, companies, sponsors, sporting bodies, etc. In simple words, it includes rewards from non-government sources.
• Awards for outstanding sportspersons from central or state governments or prestigious institutions, including cash prizes. These may be for the career achievements of a sportsperson.
• Rewards received for outstanding performances by sportspersons are also not covered under section 10(17A)(ii).

Amateur and Non-professional Sportsperson vs Professional Sportsperson

An ‘amateur’ sportsperson is a type of player who pursues any study or art purely due to interest and not for any monetary gain. In other words, an amateur is a person who pursues sports as a hobby and not a profession. On the other hand, a professional sportsperson is a person who pursues sports professionally or with the intention to make a profit.

Taxability of Awards Received by Non-professional / Amateur Sportsperson

In the case of a non-professional or amateur sportsperson, the award received by him will be categorized into sums of money and gifts.

Any sums of money received under section 56(2) received by a non-professional/amateur sportsperson are taxable in the hands of the recipient. Along with this, the following gifts received in kind will also be taxable in the recipient's hands -

• Immovable property is land, buildings, or both.
• Shares and Securities
• Jewellery
• Archeaological Collections
• Drawings, paintings
• Sculptures
• Any artwork or bullion.

Gifts received in the form of any other items will not be taxable.

Taxability of Award Received by a Professional Sportsperson

In the case of a professional sportsperson, the award received by him will be considered the benefit in the exercise of his profession and will be subject to tax under the provisions of the Income Tax Act.

However, not all awards are taxable under section 56(2). As per section 10(17A) of the Income Tax Act, all awards or rewards received by a professional sportsperson from the Central or the State Governments or on behalf of the government are not subject to tax in the hands of a professional sportsperson under the Income tax Act. Also, rewards received from local authorities or trusts are not taxable under section 56(2) of the I-T Act.

Are Olympic Winners Required to Pay Tax on The Medals Won?

Section 56(2) of the Income Tax Act states that a movable property (as specified) received as a gift without consideration is taxable in the hands of the recipient if the aggregate value of the gift exceeds Rs.50,000. However, a medal is not considered jewelry as it is not a daily wearable item like gold chain, necklace etc. Gifts under section 56(2) of the income tax act includes lands, buildings, shares and securities and jewellery, etc.

Taxability of Gifts Received from Employers?

Gifts received in cash or in kind by medal winner from their employers is considered a part of salary and taxed as per the slab rates. Gifts received from the employer of a value exceeding Rs.5,000 are considered perquisite and is added to the salary of the employee. The employer is also responsible to deduct TDS from the salary on such amount.

Hope this article helped you understand the tax implications for Indian athletes’ olympic winnings. While gifts and rewards received from government sources are exempt from tax under section 10(17A), the rewards received from sources other than government are subject to tax under section 56(2), if the aggregate value of the gifts exceed Rs.50,000, depending on the professional status of the athlete.