The Indian Premier League (IPL) is one of the most profitable and high-profile cricket leagues in the world, attracting top-tier players from across the globe. Recently, the Indian Premier League (IPL) 2025 mega auction was held in Jeddah, Saudi Arabia, and whopping 182 players were sold for INR 639.15 crore across two days of the IPL 2025 Mega Auction. Rishabh Pant became the most expensive player in the history of the Indian Premier League (IPL) when Lucknow Super Giants purchased him for INR 27 crore whereas Jos Buttler came out as the most expensive overseas buy in the auction, going to Gujarat Titans at INR 15.75 Crore. The IPL 2025 Mega Auction saw intense bidding for top overseas players, highlighting T20 cricket’s global appeal. Franchises broke records to acquire elite pacers and explosive batters, emphasizing the demand for star overseas players capable of match-winning performances.
One interesting question arises here, what about the taxability on prices received as income by these players? For non-resident (NR) players i.e. overseas players, the taxation policies surrounding their IPL earnings can be complex. Understanding the Indian tax framework, especially for overseas players, is essential to ensure compliance with the law and optimize financial interests.
Income Earned by IPL Players
IPL players have diverse income streams that contribute significantly to their earnings. They receive income from multiple sources, let us understand the various sources:
Base Salary / Auction price is assured amount for the season, determined by the player’s performance, experience, and demand in the auction.
Match Fees is the amount paid for every match played on top of the base pay. Calculated based on the number of matches played.
Prize Money is the earnings from the IPL trophy win, ‘Man of the Match,’ ‘Orange Cap,’ ‘Purple Cap,’ or performance-based bonuses, etc.
Advertisements and Brand Collaborations is another source which includes income from brand promotions, advertisements, and social media partnerships.
Taxation for IPL Players
Indian Players
Indian players are mostly considered resident taxpayers under the Income Tax Act, 1961. Income from match fees, base salary or endorsements of Indian players may be taxed under the head of ‘Profits and gains from Business or Profession’ or ‘income from other sources’ depending on the nature of income being earned. Franchises / agencies may deduct TDS at the rate of 10% under section 194J of the Income Tax Act while making these payments.
Overseas Players
As per Section 115BBA of the Income Tax Act, any income received by a overseas sportsman is taxable in India at a flat rate of 20% without any deduction for expenses. The scope of income covered under this section includes:
- Participation in any game or sport in India;
- Advertisement earnings in India;
- Contribution of articles relating to any game or sport in Indian newspapers, magazines, or journals
Benefit of Double Taxation Avoidance Agreement (DTAA)
However, the overseas players can also avail the benefit of Double Taxation Avoidance Agreement (DTAA) between India and their home country. The DTAA plays a crucial role in ensuring that overseas players participating in the IPL are not subject to double taxation on their earnings. These players often earn significant income from match fees, sponsorships, and other related activities during the tournament, the DTAA provisions help mitigate the risk of being taxed both in India and their home countries on the same income by offering tax relief through exemptions or credits.
India has signed DTAAs with over 90 countries, including cricket-playing nations like Australia, South Africa, England, New Zealand, and West Indies.
Let us understand the relevant provision related to the taxation of entertainer’s specified in the DTAA between India and various cricket playing countries such as Australia, UK, South Africa, New Zealand, etc.
Relevant extract of DTAA article:
“Income derived by residents of one contracting state (Foreign country) as entertainers, such as theatre, motion picture, radio or television artists, musicians and athletes, from their personal activities as such exercised in the other contracting state (India), may be taxed in the other state (India).”
Therefore, as per DTAA, income of overseas player from IPL may be taxed in India as per Income Tax Act as per Section 115BBA since the IPL and related activities are carried out in India by the overseas player. Overseas players can claim credit of taxes paid in India in their home country subject to conditions under home country tax law.
These DTAAs also have the following clause in the above Article:
“Where income in respect of the personal activities of an entertainer as such accrues not to that entertainer but to another person, that income may be taxed in the Contracting State in which the activities of the entertainer are exercised.”
When an entertainer (like an actor, musician, or athlete) performs abroad, the income earned is taxed in that country. Even if the payment is made to another entity (like a company or agent or sports body), the taxation rules remain the same. In such cases, the country where the entertainer’s activities took place retains the right to tax that income, even if it is received by a different entity. This prevents tax avoidance through third-party payments and ensures the source country can tax income linked to its economic activity.
An interesting scenario occurs when a competition like IPL is played outside India. In such cases, overseas players may claim that the IPL is not being played in India and hence, income from IPL for that particular year is not taxable in India and taxable in the country in which IPL is being played as activities are exercised in the other country.
The franchises, agencies making payments to overseas players are also liable to deduct TDS while making these payments. Typically, where income is taxable under section 115BBA of the Act, TDS under section 194E at the rate of 20%.
Tax Compliances
Indian players being considered resident taxpayers under the Income Tax Act, 1961, the need to file an income tax return in India under section 139(1) and report global income.
However, an overseas player is not required to file an income tax return in India under section 139(1) if:
- Their total income consists solely of the income listed above.
- TDS has already been deducted under section 194E from such income.
This provision simplifies compliance for overseas players, as long as TDS is correctly deducted at source.
Conclusion
The taxation of IPL players is governed by India’s Income Tax Act and relevant DTAA agreements. While Indian players are taxed as per their slab rates and can claim deductions, overseas players face a flat 20% TDS rate on all IPL-related income. The DTAA agreements provide some relief for overseas players, ensuring they are not taxed twice on the same income. Both Indian and overseas players should seek professional guidance to understand the full implications of these tax laws and to remain compliant while optimizing their financial interests.
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Disclaimer: The above information is intended for academic guidance and is to be used for informative purpose only. The said information is not to be considered as an opinion or advice. The aforesaid information is proprietary and privileged and is not to be used, reproduced and disclosed without consent. It is advisable to check with a subject matter expert before concluding on applicability or non-applicability of any compliance under any legislature. The views expressed are strictly personal.
Aditya Jhadav
The above article is written by Aditya Jhadav and CA Shravan Suratwala. The authors can be reached at [email protected] or [email protected]. Aditya is currently pursuing his Chartered Accountancy course and is currently completing his internship with S.M. Suratwala & Co., Chartered Accountants, Pune.
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