Higher TDS for Sportsmen

SPORTSMEN of Indian Premier League (IPL) heroes may now have to cough up a higher tax at source (TDS). The Central Board of Direct Taxes (CBDT) is examining a proposal by which sportsmen would have to pay a 10% tax at source as against 1-2% at present. The move, which comes close on the heels of IPL, could lead to a higher tax outgo when sportspersons—players, commentators, umpires etc—receive payments. CBDT is also expanding the scope of professionals defined under Section 44 AA of the Income Tax Act, 1961. At present, only legal, medical, engineering and architectural professionals, or those in accountancy, technical consultancy and interior decoration are covered under the provision of the Act. This would also require sportspersons to maintain books of accounts. Sources said at present sportspersons are covered under Section 194C of the Income Tax Act, which makes them eligible for a lower tax deduction of 1-2% at source. But now the board plans to bring them under Section 194J of the Act, which covers professionals. As per Section 194J of the Income Tax Act, 1961, if the fee for professional or technical service contracts undertaken by any of these professionals is more than Rs 20,000, the contract awardee has to deduct tax at the rate of 10%. The government had increased the rate of deduction from 5% to 10% in Budget 2007-08. The government is paying special attention to the expansion of the TDS net as it is a neat way of collecting tax. TDS collections grew over 50% to Rs 1,06,700 crore in 2007-08 from just 2.36% in 2004-05.