D Gukesh, the 18-year-old chess prodigy and youngest World Chess Champion, is about to learn that victory comes with a hefty price tag.
Of the ₹11.45 crore prize money he earned from his monumental win, nearly ₹4.09 crore will be swallowed by taxes, leaving him with ₹7.36 crore in hand.
India’s taxation rules on prize money are clear: winnings fall under “Income from Other Sources,” taxed at a flat 30%. Add a 15% surcharge (for incomes exceeding ₹1 crore) and a 4% health and education cess, and the numbers stack up quickly.
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- Basic Tax (30%): ₹11.45 crore × 30% = ₹3.43 crore
- Surcharge (15%): ₹3.43 crore × 15% = ₹50.52 lakh
- Health & Education Cess (4%): ₹3.43 crore × 4% = ₹13.74 lakh
When added up, Gukesh’s total tax liability comes to approximately ₹4.09 crore.
Gukesh’s winnings raise questions about double taxation, as the victory took place in Singapore. However, since Gukesh is an Indian resident and the prize money is likely paid in India, the Double Taxation Avoidance Agreement (DTAA) between India and Singapore may not offer significant relief. The money will be taxed primarily under Indian rules.
Gukesh’s financial reality doesn’t end there. Tamil Nadu Chief Minister’s generous ₹5 crore award is also subject to taxation since it does not qualify for exemptions under Section 10(17A) of the Income Tax Act.
Here’s the calculation:
- Basic Tax (30%): ₹5 crore × 30% = ₹1.5 crore
- Surcharge (37%): ₹1.5 crore × 37% = ₹55.5 lakh
- Cess (4%): 4% of (₹1.5 crore + ₹55.5 lakh) = ₹8.2 lakh
That brings the total tax liability to approximately ₹2.14 crore, leaving Gukesh with a net amount of ₹2.86 crore.
In total, Gukesh’s combined winnings of ₹11.45 crore and ₹5 crore face a massive tax bill of nearly ₹6.23 crore, leaving him with roughly ₹10.22 crore after deductions.