Short answer: Section 194E of the Income Tax Act, 1961 requires tax deducted at source on payments to non-resident sportsmen, non-resident entertainers and non-resident sports associations. The rate is a flat 20% on the gross amount, plus surcharge and cess where they apply. There is no threshold limit. TDS applies from the very first rupee.
What is Section 194E?
Section 194E is a special TDS section. It deals with money paid to a non-resident sportsman or entertainer who is not an Indian citizen. It also covers a non-resident sports association or institution.
The income taxed here is the income described in Section 115BBA of the 1961 Act. That income is taxed on the gross amount. The payee gets no deduction for expenses.
Who deducts? Any person who makes the payment. It could be an event organiser, a league, a broadcaster, a sponsor or a sports body. If you pay a foreign player or artist for a performance in India, this section applies to you.
India hosts IPL matches, international cricket series, concerts by foreign artists and leagues with foreign players. Indian organisers must deduct this TDS before paying them.
Section 194E in numbers
| Number | What it means | Source |
|---|---|---|
| 20% | Flat TDS rate on the gross payment, raised from 10% by the Finance Act 2012 | Finance Act 2012 |
| Rs 0 | No threshold — TDS applies from the first rupee | Income Tax Act, 1961, Section 194E |
| 4% | Health and Education Cess on tax plus surcharge | Finance Act |
| 15% | Surcharge cap for this income, under the Finance Act 2022 | Finance Act 2022 |
| 1039 | TDS reporting section code for this category under the Income-tax Rules, 2026 | Income-tax Rules, 2026 |
What is the TDS rate under Section 194E?
The basic rate is 20%. It is a flat rate on the gross amount. The rate is the same whatever the fee size. The Income Tax Department’s TDS rate chart for FY 2026-27 lists Section 194E at 20% for payments to non-resident sportsmen and sports associations.
Surcharge applies on high payments. It is 10% where the payment exceeds Rs 50 lakh. It is 15% above Rs 1 crore. For this income, the surcharge is capped at 15% under the Finance Act 2022.
Health and Education Cess is charged at 4%. The cess is calculated on the tax plus surcharge.
There is no threshold limit under section 194E. TDS applies from the first rupee. There is no minimum amount below which you can skip the deduction. Even a small payment needs TDS.
The 20% rate is not new. The Finance Act 2012 raised it from 10% to 20%, and it has applied since then.
Who has to deduct TDS under Section 194E?
Any person who makes the payment has to deduct. There is no exemption for small organisers or one-time payers.
The timing rule matters. You must deduct at the earlier of two events:
- when you credit the income to the payee’s account, or
- when you actually pay the amount.
So if you credit the amount in your books first and pay later, the deduction duty starts on the credit date. Do not wait for the money to leave your bank.
What income is covered?
The income must fall under Section 115BBA. There are three types of payees.
Non-resident sportsman (including an athlete). Covered income is:
- income from playing any game or sport in India
- income from advertising
- income from writing articles about a game or sport for newspapers, periodicals or journals
Card games and gambling winnings are not covered here. Those are taxed under Section 115BB — see our guide to Section 194B TDS on lottery winnings.
Non-resident entertainer. Covered income is income from performing in India. A concert, a stage show or a similar performance falls here.
Non-resident sports association or institution. Covered income is any amount guaranteed to be paid or payable to it for a game or sport played in India.
One more point. Under Section 115BBA, the payee gets no deduction for expenses. Travel, training costs and agent fees cannot be claimed. Tax is charged on the full gross amount.
Section 194E vs Section 195 — which one applies?
Section 195 is the general TDS provision for payments to non-residents. Section 194E is the special provision for Section 115BBA income.
The rule is simple. When the payment is 115BBA income, use Section 194E. Do not use Section 195.
Section 194E is more specific, so it wins. It gives you the flat 20% rate and the no-threshold rule. Section 195 would take you into a different set of rate rules, which is not what Parliament intended for sports and entertainment payments. For the general rule on payments to non-residents, read our guide to TDS on sale of property by NRIs under Section 195.
Also, do not confuse section 194e with Section 194EE. Section 194EE is a different section. It covers 10% TDS on National Savings Scheme withdrawals above Rs 2,500. The names look similar. The subject matter is not.
What changed from 1 April 2026?
From 1 April 2026, the Income-tax Act, 2025 applies. The old sections got new numbers.
- Section 194E is now Section 393(2), Table Serial No. 1
- Section 115BBA is now Section 211
- The TDS reporting section code is 1039
The rates have not changed. The 20% flat rate stays. Surcharge and cess stay. The no-threshold rule stays. Only the section numbers and the reporting code are new.
In practice, this means your paperwork changes, not your maths. Use the new section reference and code 1039 in your returns and challans for payments from 1 April 2026.
Worked examples
Example 1: Foreign cricketer, appearance fee of Rs 50,00,000
- TDS at 20% = Rs 10,00,000
- Cess at 4% of Rs 10,00,000 = Rs 40,000
- Total TDS = Rs 10,40,000
- Cricketer receives = Rs 39,60,000
No surcharge here. Rs 50 lakh is not above Rs 50 lakh.
Example 2: Non-resident singer, concert fee of Rs 25,00,000
- TDS at 20% = Rs 5,00,000
- Cess at 4% of Rs 5,00,000 = Rs 20,000
- Total TDS = Rs 5,20,000
- She receives = Rs 19,80,000
Example 3: Foreign football association, Rs 2,00,00,000 guaranteed for a tournament in India
- TDS at 20% = Rs 40,00,000
- Surcharge at 15%, since the payment is above Rs 1 crore = Rs 6,00,000
- Tax plus surcharge = Rs 46,00,000
- Cess at 4% of Rs 46,00,000 = Rs 1,84,000
- Total TDS = Rs 47,84,000
- Association receives = Rs 1,52,16,000
How to deposit TDS and file the return
Deposit. Pay the TDS into the government account by the 7th of the next month. For March payments, the due date is 30 April. Use Challan ITNS 281.
Return. File the quarterly TDS return in Form 27Q. The due dates are:
- 31 July for the first quarter
- 31 October for the second quarter
- 31 January for the third quarter
- 31 May for the fourth quarter
Certificate. Issue the TDS certificate to the payee. This is Form 16A. Under the 2025 Act, it is now Form 131 — see our guide to Form 131, the TDS certificate. The foreign player or artist needs this certificate to claim credit for the tax in their home country or in India.
What happens if TDS is not deducted?
Not deducting TDS creates problems for the payer. The Act provides for three types of consequences.
Interest. Under Section 201(1A), interest is charged at 1% per month (or part of a month) for the period from the date the tax was deductible to the date it is deducted, and at 1.5% per month from the date of deduction to the date it is deposited with the government.
Penalty. Under Section 271C, a penalty of up to the amount of tax not deducted can be levied.
Disallowance. Under Section 40(a)(i), the full payment to the non-resident is disallowed as a business expense if the TDS was not deducted. You lose the deduction in your own tax computation.
The Supreme Court has also spoken on the deduction duty. In CIT v. PILCOM (2020), the Court held that the payer must deduct TDS under Section 194E even where a Double Taxation Avoidance Agreement might exempt the income. The payer’s duty to deduct does not wait for the treaty question to be settled.
Do DTAA benefits apply?
Yes, but not at the deduction stage. This is the PILCOM point.
Suppose India has a tax treaty with the sportsman’s country, and the treaty would exempt or reduce the tax. The payer still deducts at 20%. The payer does not decide treaty questions.
The payee then files an income tax return in India and claims a refund of the excess tax. That is the route the Supreme Court laid down. Our guide explains how to claim a TDS refund online.
So the practical position is: deduct first, refund later. Do not skip the deduction because you believe a treaty covers the payment.
Does the sportsman need to file an ITR in India?
Usually, no. A non-resident sportsman or entertainer whose only Indian income is Section 115BBA income does not have to file an Indian return, provided TDS has been fully deducted on that income.
But if the payee wants a refund, they must file a return. A refund cannot come without one. This is common where a DTAA reduces the tax below 20%.
FAQ
What is Section 194E in income tax?
It is the TDS section for payments to non-resident sportsmen, non-resident entertainers and non-resident sports associations. It applies to income covered by Section 115BBA. From 1 April 2026, it is Section 393(2), Table Serial No. 1 of the Income-tax Act, 2025, with reporting code 1039.
What is the TDS rate under Section 194E?
The rate is a flat 20% on the gross amount. Surcharge applies at 10% where the payment exceeds Rs 50 lakh and 15% above Rs 1 crore, capped at 15% for this income. Health and Education Cess is 4% on the tax plus surcharge.
Is there a threshold limit under Section 194E?
No. There is no threshold. TDS applies from the first rupee. There is no minimum payment below which the deduction can be skipped.
Who is required to deduct TDS under Section 194E?
Any person making the payment. That includes event organisers, leagues, broadcasters, sponsors and sports bodies. The deduction must be made at the earlier of crediting the income to the payee’s account or making the actual payment.
What is the difference between Section 194E and Section 195?
Section 195 is the general TDS section for payments to non-residents. Section 194E is the special section for Section 115BBA income. When the payment is 115BBA income, use Section 194E, not Section 195.
Can DTAA reduce the TDS rate under Section 194E?
Not at the time of payment. Under CIT v. PILCOM (2020), the payer must still deduct under Section 194E even if a treaty might exempt the income. The payee can then file an Indian return and claim a refund.
Does a non-resident sportsman need to file ITR in India?
Not if Section 115BBA income is their only Indian income and TDS was fully deducted on it. They must file a return if they want a refund, for example after claiming a treaty benefit.
What is the TDS return form for Section 194E?
The quarterly TDS return is filed in Form 27Q. Due dates are 31 July, 31 October, 31 January and 31 May. The TDS certificate issued to the payee is Form 16A, now Form 131 under the 2025 Act.
Official Sources
- Income Tax Department e-filing portal: incometax.gov.in
- Income Tax Department website: incometaxindia.gov.in
- TDS Centralised Processing Cell: tdscpc.gov.in
For the exact text of the provisions, forms and notifications, check these official sources. Rules and limits can change with each Finance Act.
Reviewed by Asuthod Rathod, CA. Last updated: 15 November 2026.
This article is general information for Indian readers. It is not tax advice. Your own case depends on your income sources, the treaty position and the tax year. Please speak to a qualified tax professional before you act.
Editorial byline for eircicai income tax guides — covering the Income Tax Act, 2025, section renumbering, regime comparison, and deductions. Content is reviewed by Asuthod Rathod, CA.