Section 194E of ITA, 1961 : Section 194E: Payments To Non-Resident Sportsmen Or Sports Associations

Explanation using Example

Imagine a scenario where a non-resident tennis player, who is not a citizen of India, participates in a tennis tournament in Mumbai. The tournament organizer agrees to pay the player a participation fee of $50,000. Under Section 194E of the Income-tax Act, 1961, the organizer is required to deduct tax at the source (TDS) at the rate of twenty per cent when they credit this fee to the player's account or when they make the payment, whichever occurs first. Therefore, the organizer must deduct $10,000 as TDS and the non-resident player will receive the net amount of $40,000.