IPL Auction 2025: The IPL is widely regarded as the most lucrative domestic T20 cricket league in the world, attracting top talent with whopping salaries. With significant sponsorships and broadcast deals, IPL franchises spare no expense in securing the services of top players. Two days back, Rishabh Pant made history by becoming the most expensive purchase in IPL history, signing with Lucknow Super Giants for a record fee of Rs 27 crore in the mega auction.
Similarly, Australian fast bowler Mitchell Starc fetched a hefty sum during the IPL 2025 auction in Jeddah, Saudi Arabia. Starc was acquired by Delhi Capitals (DC) for an impressive Rs 11.75 crore. It is worth mentioning that Starc previously made headlines in the IPL 2024 auction when he became the highest-priced player ever sold, going to Kolkata Knight Riders (KKR) for Rs 24.75 crore.
How are players taxed on their IPL salaries?
Taxation of Indian and foreign players in India, particularly in events such as the IPL (Indian Premier League), varies according to their residential status and the applicable Indian tax laws on income earned in India:
Residential Status
> Indian players are typically considered residents of India for tax purposes, making their worldwide income subject to taxation in the country.
> Foreign players are typically classified as non-residents for Indian tax purposes due to their limited time spent in India during the IPL season.
> Players will receive their funds according to the tax deduction at source (TDS) rates set at 10% for Indian players and 20% for foreign players.
> Prior to receiving payment, players must sign a tripartite agreement with both the BCCI and the franchise. If a franchise fails to make a payment, the BCCI will step in to make the payment and deduct the appropriate amount from the franchise’s central revenue fund.
Taxability of income from IPL contracts
CA (Dr.) Suresh Surana told Business Today that IPL franchises pay Indian players an amount that is considered professional income. The earnings from IPL are combined with their total income for the year and subjected to taxation based on the relevant marginal income tax slab rates.
“The entire amount paid by IPL franchises to the Indian players would generally constitute professional income. The IPL earnings are added to their total income for the financial year and taxed according to the applicable marginal income tax slab rates. For high-income players such as Rishabh Pant and Shreyas Iyer, this generally means a 30% tax rate, plus applicable surcharge and cess. Also, any expenditure incurred in connection with such activities should also be available as deduction,” Dr Surana said.
“Non-Resident Indian (NRI) players and foreign athletes are subject to taxation under specific provisions of Section 115BBA of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). In accordance with the said section, the total income of a non-resident sportsman (including athletes) who is not a citizen of India and a non-resident participates in any game or sport in India is subject to special taxation. This includes income received or receivable from participation in any game or sport in India (excluding games where winnings are taxed under Section 115BB), as well as income from advertisements or contributions of articles related to any game or sport in Indian newspapers, magazines, or journals,” he added.
“According to Section 115BBA of the Income Tax Act, 1961, foreign athletes and sportspersons who are not Indian citizens and are non-residents are subject to special income tax provisions. This includes income from: Participating in any game or sport in India (excluding lottery winnings), advertisements, contributing articles related to any game or sport in India to newspapers, magazines, or journals. The income tax for these individuals is calculated at a flat rate of 20% on the aggregate income from the above sources. Furthermore, a 20% TDS (Tax Deducted at Source) is applied when these players receive their income in India. As a result, they are not required to register for a PAN (Permanent Account Number) in India,” said Dinesh Jotwani, Co-managing partner at Jotwani Associates.
Other clauses for foreign players
“Foreign players may also benefit from Double Taxation Avoidance Agreements (DTAA) if their home country has such an agreement with India. In such cases, they may not be subject to additional taxes in their home country. In contrast, Indian IPL players are taxed according to their respective income tax slabs, with a typical tax rate of 30% on their earnings. However, the TDS for Indian players may only be 10% since they must file their annual income tax returns in India,” Jotwani added.
Dr Surana further added that to pay Non-Resident Indian (NRI) or foreign players, the payer/deductor must obtain Form 15CB from a Chartered Accountant when remitting amounts exceeding Rs 5 Lakhs.
“When making payments to Non-Resident Indian (NRI)/ foreign players, the payer/deductor is required to obtain Form 15CB from a Chartered Accountant. This form certifies that the necessary tax has been deducted at source (TDS) in accordance with Indian tax laws. The form is a crucial document for ensuring tax compliance, and it must be submitted along with Form 15CA, which is a self-declaration form that provides details of the remittance and tax deducted. No such requirement would be necessary in case of Indian players,” Dr Surana said.
What will the takeaway salary be?
Lucknow acquired Rishabh Pant for a total of Rs 27 crore, but the amount is for three seasons – 2025, 2026, and 2027. Therefore, he won’t get the amount at one go.
Additionally, the Income Tax department will deduct Rs 8.1 crore as tax from Pant’s overall contract amount. As a result, Pant will receive a net salary of Rs 18.9 crore from the IPL team for the three-year contract.
In the event that Rishabh Pant is injured during the IPL, he will be entitled to his full payment. However, if he gets injured prior to the tournament, resulting in his inability to participate in the league, which starts in March 2025, the franchise reserves the authority to substitute him with another player.
How will Vaibhav Suryavanshi be taxed?
In India, the taxation of a minor’s income is regulated by the Income Tax Act and is based on whether the income is earned or unearned. Vaibhav Suryavanshi, the 13-year-old aspiring cricketer from Bihar who recently landed an IPL contract worth Rs 1.10 crore, is subject to specific tax regulations, explained Sujit Bangar, Founder, Tax Buddy.
Here’s his taxation breakup:
1. Earned Income: This includes income generated through personal effort, skills, or talent, such as earnings from sports, acting, or entrepreneurial ventures.
2. Unearned Income: This encompasses income from passive sources like interest, savings, or investments made by a parent or guardian in the minor’s name.
Taxation of Earned Income: Earnings derived from a minor’s skills, such as Vaibhav’s IPL contract, are taxed in the minor’s name rather than being clubbed with a parent’s income under Section 64(1A) of the Income Tax Act. These earnings are subject to individual tax slabs, and since they surpass the basic exemption limit, Vaibhav must file an Income Tax Return (ITR). His income will be taxed as per the rates applicable to individuals.
Taxation of Unearned Income: Unearned income, such as interest or dividends, is typically clubbed with the income of the parent with the higher earnings. Parents can claim an annual exemption of up to Rs 1,500 per child under Section 10(32). However, if a minor’s total income, including unearned income, exceeds that of their parents, the minor’s unearned income is taxed in their own hands.
Filing Income Tax Returns:
> For Earned Income: Minors earning above the exemption limit must file an ITR, with a parent or guardian acting as the ‘representative assessee.’
> For Unearned Income: Such income is included in the parent’s ITR under clubbing provisions unless exempted as per the rules.
> Special Provisions: Income arising from manual labor or personal talent is always taxed in the minor’s own name.
“In Vaibhav’s case, his IPL earnings are considered earned income generated through his cricketing skills. These earnings will be taxed under his PAN, with his guardians overseeing his tax compliance and filing obligations,” Bangar added.