What is Section 194E & Section 194EE under Income Tax Act?


(Last Updated On: August 8, 2019)


In this part of our TDS series, we’ll touch 2 other important tax deduction provisions that are Section 194E & Section 194EE, These are:




Section 194E: TDS on Payments to Non-Resident Sportsmen or Sports Association


India’s love for cricket can’t be defined by a single ‘word’. Whenever there is any cricket match whether involving the Indian team or IPL, the madness is clearly visible.

But have you ever wondered, how is the income of many foreign players like Angelo Mathews, David Warner etc or even umpires is taxed in India? Not only cricket, but many international players regularly visit India for tournaments from all sports like football, hockey, boxing, and the list is endless.

This is where, Section 194E plays a vital role, as it specifically targets income earned by sportsmen etc in India.


  • Who is required to deduct TDS u/s 194E?

          Any person who

  • Pays money to a non-resident sportsman (including an athlete) or an entertainer (who is not an Indian citizen); or
  • Pays money to a sports institution or an association,

         an income as referred u/s 115BBA is required to deduct tax at source u/s 194E.


  • What is Section 115BBA?

This section provides a special tax rate @ 20% (plus EC and SHEC), Plus Surcharge as applicable on specified income arising to a Non-Resident Sportsman or Entertainer or Sports Association.

However, no deduction for any expenditure incurred and allowance is given to such assessee u/s 115BBA.

Specified income includes income from participating in any games/ sports/ performance or income from advertising or income from contributing articles in the newspaper. All such income should arise only in India.


  • What is the rate & time of tax deduction u/s 194E?

The rate of tax deduction u/s 194E is 20% exclusive of EC and Surcharge. And the time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or other modes).

 


Section 194EE: TDS on Payment for Deposit Under NSS


  • Who is required to deduct TDS u/s 194EE?

Any person who pays an amount under section 80CCA(2)(a) i.e. National Savings Scheme to another person is required to deduct tax under this section.


  • What is the rate & time of tax deduction u/s 194EE?

The rate of tax deduction u/s 194EE is 10% and the time of deduction is when the payment is made.


  • No Requirement of TDS :
  • When the amount paid (at once or total during the financial year) to the payee (i.e. the receiver) is less than ₹2500.
  • No deduction when the amount is given to the heirs of the assessee.

CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.