Tax Implications for Indian Athletes' Olympic Winnings

In addition to being a significant international athletic event, the Olympic Games also function as a platform for global diplomacy and a celebration of achievement and solidarity. The World Athletics Body has increased the prize money for track and field gold medallists by USD 50,000 ahead of the 2024 Summer Olympics in Paris. This is a step to acknowledge the competitors' efforts and accomplishments in these competitions. With medals for India in shooting, wrestling, and javelin throwing, Indian athletes have performed admirably at the 2024 Olympics. These athletes receive money, presents, and other incentives from government and private organizations besides the medals. It raises the question of whether or not these awards and gifts are taxable. This article clarifies if Indian athletes' gifts and prizes from their Olympic victories are taxable.

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Table of Contents

• Taxability of Rewards for Olympic Medal Winners from Central and State Government

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

• Taxability of Rewards

• Taxability of Gifts Received from Employers

• Taxability of Sponsorships

• Amateur and Non-professional Sportsperson vs Professional Sportsperson

• Taxability of Awards for Non-professional / Amateur Sportsperson

• Taxability of Award for a Professional Sportsperson

• Conclusion

• Frequently Asked Questions

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Taxability of Rewards for Olympic Medal Winners from Central and State Government

Any cash or in-kind payment made by the CBDT approval order issued under Section 10(17A)(ii) of the Income Tax Act would be tax-free provided that the following requirements are complied with:

• If the Central or State government receives the payment

  
  

• Whether medal winners from the Commonwealth, Asian, or Olympic games receive remuneration.

  
  

• If money comes as compensation.

The exemption applied to awards obtained after January 28, 2014. Consequently, any player who wins a gold, silver, or bronze medal will not be required to pay taxes on the prize money. The prize may be monetary or in-kind. A financial award might be one-time or ongoing, such as a lifetime pension for a medal winner. Whether he plays professional sports or is an amateur, these incentives will be tax-exempt.

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

Examples of prizes and incentives not covered by the CBDT exemption order are listed below:

• Olympic medal winners receive rewards from sporting organizations, businesses, sponsors, and non-profits. It encompasses incentives from non-governmental organizations.

  
  

• Awards, including monetary rewards, are given by federal, state, or elite organizations to exceptional athletes. These could be for a sportsperson's professional accomplishments.

  
  

• Additionally, section 10(17A)(ii) does not apply to awards given to athletes for exceptional performances.

Taxability of Rewards

Taxability of Benefits Obtained from Private Entities

• Typically, businesses, trusts, sponsors, non-governmental organizations, etc., announce the cash or in-kind (property, apartment, car, etc.) incentives for Olympic medal winners. 

  
  

• Olympic medal winners must pay taxes on the rewards that these organizations disclose.

  
  

• These are subject to their slab taxation rate under the Income from Other Sources.

  
  

• An Olympic medal winner's car receipt as a reward is exempt from taxes since it is not considered a capital asset.

Taxability of Gifts Received from Employers

Employers give cash or in-kind gifts to medal winners, which are taxed at slab rates and considered part of their pay. When an employee receives gifts from their employer worth more than Rs. 5,000, they are deemed a prerequisite and are added to their pay. The employer is also responsible for deducting TDS from the employee's pay for that sum.

Taxability of Sponsorships

Opportunities to act as an influencer for a product or service or the taxability of sponsorships

• Olympic medal winners take sponsorships or compensation as influencers to provide professional services.

  
  

• The money earned from this kind of sponsorship is subject to business or professional income tax.

Olympic medal winners only receive tax-free government prizes; all other incentives are subject to taxes. At the time of tax filing, taxable and non-taxable/exempt income and assets and liabilities must be declared to disclose the assets acquired.

Amateur and Non-professional Sportsperson vs Professional Sportsperson

A player who pursues any study or art out of pure interest and without any financial gain is known as an "amateur" sportsperson. Stated differently, an amateur is a person who plays sports as a pastime rather than a career. A professional sportsperson, on the other hand, is someone who plays sports professionally or to turn a profit.

Taxability of Awards for Non-professional / Amateur Sportsperson

A non-professional or amateur athlete's award gets divided into cash and gifts.

Any payments made to a non-professional or amateur athlete under Section 56(2) are taxable in the recipient's possession. In addition, the recipient will be responsible for paying taxes on the following in-kind gifts:

• Buildings, land, or both might be considered immovable property.

• Securities and Shares

• Jewellery

• Collections of Archaeology

• Paintings and drawings

• Sculptures

• Any bullion or piece of art.

Any other type of gift received will not be subject to taxes.

Taxability of Award for a Professional Sportsperson

A professional athlete's salary is considered a benefit of his employment and is subject to the Income Tax Act. Not every award is subject to section 56(2) taxation. According to section 10(17A) of the Income Tax Act, professional athletes are exempt from paying taxes on any honours or prizes they receive from the federal government, state governments, or on behalf of the government. Additionally, under section 56(2) of the I-T Act, awards obtained from trusts or local authorities are exempt from taxes.

Conclusion

In summary, Olympic medal winners only receive tax-free government prizes; all other incentives are subject to taxes. Declaring assets and liabilities at the time of tax filing, along with taxable and non-taxable/exempt income, is required to offer a thorough disclosure of acquired assets. All winners must follow the rules to stay on the right side of the compliance guidelines. 

Frequently Asked Questions

Is Olympic prize money taxable in India?

Government gifts and cash are not taxable in India. The Central Board of Direct Taxes (CBDT) claims that under Section 10 (17A) of the Income Tax Act, awards provided to Olympic, Commonwealth, or Asian Games medallists by the federal or state governments are tax-exempt.

Do athletes pay taxes in India?

The Revenue Tax Act of 1961 states that athletes and artists participating in events or performances are subject to taxation on all revenue earned or received in India.

How to calculate tax on sports prize money in India?

The tax may be paid by the prize distributor or collected from the winner. The effective tax rate on such gains is 31.2%, a combination of a 30% tax rate plus a 4% cess, such as the health and education cess.

Is any tax exempt for sports achievement?

Residents who are professional athletes or sportsmen are eligible for a tax exemption under Section 115BBA. Only earnings from competing in international athletic competitions hosted in India are excluded from this rule.

What is sports exemption?

According to Section 10(39) of the Income Tax Act, any money received by non-resident athletes or sports organizations from competing in or hosting an international competition in India gets excused from taxes.

What is the tax on winning prize money from online gaming in India?

Lottery, game show, and internet gaming income are subject to a special 30% tax rate, with TDS subtracted before the payout of winners. For prizes beyond Rs. 10,000, TDS gets charged at 31.2% under Section 194B. This tax obligation is solely based on the flat rate on victories.

How are Olympic cash prizes taxed for Indian athletes?

Olympic prize money is treated as “Income from Other Sources” and taxed at the athlete’s applicable slab rate, increasing their total taxable income for the year.

Are there any government exemptions for Olympic winnings?

Occasionally, the central or state government may announce specific tax exemptions for Olympic medalists, but unless notified, winnings remain fully taxable.

How is non-cash support (like cars or real estate) awarded to athletes taxed?

Non-cash rewards are taxed at their fair market value and must be declared as income in the financial year they are received, with tax paid as per slab rates.

Is TDS deducted at source on Olympic winnings?

Yes, event organizers or sponsors may deduct TDS before disbursing large cash prizes, and athletes must report the net and gross amounts in their ITR.

Can athletes claim deductions against their Olympic winnings?

Standard deductions do not apply to prize money, but if athletes incur direct expenses to earn the prize (like training or travel), they may claim them with proper documentation.

How should athletes report Olympic winnings in their income tax return?

Athletes must declare the full value of cash and non-cash prizes under “Income from Other Sources” and ensure all TDS certificates are attached for accurate tax credit.

Are rewards from state governments or private sponsors taxed differently?

Unless specifically exempted by notification, all rewards—whether from government, state, or private sponsors—are taxable in the year received.

How do double taxation agreements affect athletes who win abroad?

If an athlete receives prize money outside India, double taxation avoidance agreements may apply, allowing credit for taxes paid abroad against Indian tax liability.

What are the tax planning strategies for athletes with large winnings?

Athletes should consult tax professionals to plan advance tax payments, invest winnings for future security, and ensure proper documentation to avoid scrutiny.

What are the consequences of not declaring Olympic winnings in the ITR?

Non-disclosure can lead to tax notices, penalties, and interest on unpaid tax, so athletes must ensure full and timely reporting of all winnings and rewards.