Sports over the past couple of decades have developed itself as a multi-billion dollar industry. An industry with an all-encompassing worldwide presence is bound to raise its own disputes. This has resulted in the growth and development of sports law as a separate regulation in its own right. Sports law in itself is not always a separate stream of law. It is typically a collection of laws such as labor law, contract law, competition or antitrust law, and tort law. Defamation and privacy rights issues also form an integral aspect of sports law[1].

Before we discuss the Taxation of Sports and sporting incomes in India, it is important to understand the context behind the rise of sports as a past-time in India. The level of Investments in sports in developing nations is markedly less as compared to developed nations, It is therefore no surprise that recreational activities such as sports would not lie very high on the list of priorities of a country such as India. A strong correlation between the level of economic development and sporting development in a country has been demonstrated by several documented studies, It has been also been demonstrated using statistical sampling that the probability of a country’s athletes wining gold medals at the Olympics increases in direct proportion to increase in per capita GDP and population[2].

India’s most successful professional sports league, The IPL earns hundreds of crores in profit on an annual basis. The success of the league can be demonstrated by the fact that the league earned a surplus of Rs 237 crores in its fifth edition. The success of the IPL has led to a proliferation of interest in the creation of professional sporting leagues and annual events in other sports as well. The inaugural edition of the Indian Soccer League, for example, racked up almost 429 million viewers to emerge as a potent television property. The monetization of such viewer interest is often essential for the continued existence of such leagues and sporting events. This has led to adoption of proven revenue models as prevalent in other countries (primarily the United States of America, a leader in professional sports leagues) and in other cases creation of new business models.

The chief sources of revenue for professional sporting events include:


Media/Broadcast rights include the right to carry and display the respective sports events on traditional as well as new media such as television, theaters, radio, and the internet. he sale of broadcasting and media rights is now the biggest source of revenue for most sports organizations, generating the funds needed to finance major sporting events, refurbish sports stadia, and contribute to the development of sport at grassroots level. Of the estimated $1.7 billion paid by broadcasters for exclusive rights to broadcast the 2008 Beijing Olympic Games, about half went to the organizing committee for the Games and the other half to the broader Olympic movement, including National Olympic Committees and the international federations for the various Olympic sports.


It is widely estimated that FIFA earned almost $ 1.4 Billion by way of sponsorship deals during the 2014 world cup in Brazil . All over the world marketers spent almost $14.35 billion on sports sponsorship, as per several reports sports takes up almost 70% of all sponsorship business worldwide. In the Indian context brands spent around Rs 4100 crore on various sports sponsorships in the year 2013 Sponsorships provide a stable source of revenue for the federation, league, franchise and athlete and at the same time provide another avenue for brands to reach out to potential customers and clients.


Professional sporting leagues also make money through franchise fee’s which are sums paid by interested parties in order to secure rights to operate a franchise in such league, other sanctioned events such as the cricket world cup, Olympic games earn revenues for the organizers through gate revenues or ticket fee. Other local sources of revenue include concession stands, restaurants operated by teams in their stadiums, merchandise sales and membership’s packages offered by them to their patrons.


Taxability under Domestic Law:-

· Section 5 r.w.s. 9 will determine taxability of income of Artistes etc. in India

· Section 115BBA – Tax on non-resident sportsman or sports association

· CBDT Circular No. 787 dated 10.02.2000

· Withholding tax u/s. 194E

In addition to same, the Central Government is empowered by section 10(39) of the Income Tax Act, 1961 to exempt any international sporting event being held in India from taxing. Such exceptions are generally granted when the event being held is of international importance and being organized by an international recognized body. Recently such exemptions were given to the World Cup organized by International Cricket Council (ICC), The Commonwealth Games New Delhi 2010 and the F1 race event held in Noida in later half of 2011.

Ø Tax on non-resident sportsmen or sports associations 115BBA.

1) Where the total income of an assesse, -

a) Being a sportsman (including an athlete), who is not a citizen of India and is a non-resident, includes any income received or receivable by way of -

i. participation in India in any game (other than a game the winnings wherefrom are taxable under section 115BB) or sport; or

ii. advertisement; or

iii. contribution of articles relating to any game or sport in India in newspapers, magazines or journals; or

iv. Being a non-resident sports association or institution, includes any amount guaranteed to be paid or payable to such association or institution in relation to any game (other than a game the winnings wherefrom are taxable under section 115BB) or sport played in India; or……

b) Being a non-resident sports association or institution, includes any amount guaranteed to be paid or payable to such association or institution in relation to any game (other than a game the winnings wherefrom are taxable under section 115BB) or sport played in India; or

c) Being an entertainer, who is not a citizen of India and is a non-resident, includes any income received or receivable from his performance in India,] the income-tax payable by the assessee shall be the aggregate of—

i. the amount of income-tax calculated on income referred to in [clause (a) or clause (b) or clause (c)] at the rate of [twenty per cent.]; and

ii. the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the amount of income referred to in [clause (a) or clause (b) or clause (c)]:

Provided that no deduction in respect of any expenditure or allowance shall be allowed under any provision of this Act in computing the income referred to in 3[clause (a) or clause (b) or clause (c)].

2) It shall not be necessary for the assessee to furnish under sub-section (1) of section 139 a return of his income if—

a) his total income in respect of which he is assessable under this Act during the previous year consisted only of income referred to in [clause (a) or clause (b) or clause (c)] of sub-section (1); and

b) the tax deductible at source under the provisions of Chapter XVIIB has been deducted from such income.]

Taxation of Artistes & Sportsmen- Income-tax Act:-

Ø Applies to a non-resident and a person who is not a citizen of India

· Who is a sportsman (including athlete) and

· Earns income from

§ Participation in India in any game or sports

§ Advertisement

§ Contribution of article in newspaper, magazine or journals relating to any game or sport in India

Ø Applies to a non-resident sports association or institution

· Who Earns income from

§ Guarantee money in relation to any game or sport played in India

§ Except games referred to in S. 115BB

Ø Applies to a non-resident and a person who is not a citizen of India

· Who is an entertainer and

· Earns income from his performance in India

Ø Applicable tax rate is 20% on gross income

Ø Deduction of expenditure incurred for earning income is not allowed

Ø No need to file return if tax is withheld

In the case of non-residents it is also worth examining the provisions of the relevant Double Taxation Avoidance Agreements (DTAA) since such provisions are applicable as per section 90(2) of the income tax act wherever they are more beneficial.

DTAAs usually specify a separate article (article 17 as per the model convention) that deals with incomes of entertainers and sportspersons who perform internationally. The model convention as well the most DTAAs entered into by India provide for taxation of incomes earned at the country of source, which for the purposes of this study is India. As per the provisions of article 17(1) other incomes earned by the sportspersons by way of consideration for interviews, articles, press conferences etc. shall also be deemed to be closely associated with the performances of the sportspersons and shall be subject to tax in the country of source. Further, incomes earned by agents, star companies, and other mechanisms on behalf of the sportspersons is also subject to tax in the country of source per the articles. Though their own incomes remain outside the scope of both 115BBA of the domestic statue as well as article 17. With reference to star companies, where any sportsperson is paid a salary instead of payments for a separate performance then the proportionate amount of salary earned for performance in the source country (India) will be liable to tax in India. Star companies, or entities formed in low tax jurisdictions to avoid taxes by way of diverting incomes from the sportspersons themselves and tax them in the hands of such entities instead of the sportspersons have been addressed by way of clause 17(2) of the model convention which stipulates that the incomes of such companies be taxed in the country of source. Clause 17(2) can further be used state of source to tax at the level of the team the portion of the performance income which cannot be taxed in the hands of the individual performers, regardless of whether the team has a permanent establishment in that country. A reference may also be made to the landmark case of Agassi Vs Robinson where it was held that endorsement incomes paid by non-resident companies which are received by a non-resident sportsperson for specific performances in the UK shall be proportionally subject to taxation in the UK to the extent that such payments pertain to the performances in UK. Therefore any revenues earned by a sportsperson for endorsement etc. for a non-resident entity can be taxed in the country where such activities are performed! In addition to the aforementioned articles 17(1) and 17(2) most tax treaties signed by India also include article 17(3) by virtue of which India reserves the right to exclude from the purview of articles 17(1) and 17(2) any professional incomes earned by sportspersons for performances that are substantially supported by public funds. In such circumstances the right to tax shall lie with the country of residence and not the country of source.

CONCLUSION The emergent interaction between sports and law has shaped a new need for a greater understanding of how the law relates to the sporting world. India needs expert sports law consultants to meet an amalgam of diverse legal disciplines such as sports law and policy, contract, tort, taxation, labor, competition, TV rights, match fixing and related criminal laws. In my opinion legal practitioners and sports person must come together to understand, advance, promote and ethically practice sports law in India.

Given the close relation of sports with national pride and the kind of influence it has on the mind of the nation, the state has the most important role to play. It is very clear that the existing model has not succeeded in achieving its objective and it is time for a new model to be made. Also, it is quite clear that our culture and our attitude towards sports is the biggest hindrance in improving sporting standards[3].

[1] Nishithdesai, assessed on18.02.2019

[2] Arkay and Darkay assessed on 18.02.2019

[3] Ipleaders, assessed on 18.02.2019

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