Income Tax - Rewards to Olympic Award Winners Exempted
AS per Section 10 (17A) of the Income Tax Act, the following income is not included in the total income:
any payment made, whether in cash or in kind,-
(i) in pursuance of any award instituted in the public interest by the Central Government or any State Government or instituted by any other body and approved by the Central Government in this behalf; or
(ii) as a reward by the Central Government or any State Government for such purposes as may be approved by the Central Government in this behalf in the public interest;
So, a reward given by the Central Government or State Government is exempted only if approved by the Central Government.
CBDT had clarified in Circular No. 447 dated 22.01.1986 that awards received by a sportsman, who is not a professional, will not be liable to tax in his hands as the award will be in the nature of a gift and/or personal testimonial. This Circular was applicable in a tax regime when gift was not taxable in the hands of the recipient and with the fundamental change in the manner of treatment of gift by amending the definition of income under sub-section (24) of section 2 by introduction of sub-clauses (xiii), (xiv) and (xv) therein and insertion of clauses (v), (vi) and (vii) in sub-section (2) of section 56 of the Income-tax Act, 1961 ('Act'), the gifts became taxable in the hands of recipient with effect from 1.4.2005. The said Circular No. 447 had therefore become inapplicable with the change in law and is to be treated as overridden by the aforesaid statutory provisions with effect from 01.04.2005.
Board in a Circular dated 20.01.2014 further clarified that in terms of provisions of clause (17A) of Section 10, Central Government approves awards instituted by Central Government, State Government or other bodies as also the purposes for rewards instituted by Central Government or State Government from time to time. Tax exemption can be sought by eligible persons in respect of awards or rewards covered by such approvals.
Now, the Central Government has approved any payment made, whether in cash or in kind, as a reward by the Central Government or a State Government to the medal winners of the Olympic Games or Common Wealth Games or Asian games.
CBDT Circular No. 2/2014 in F.NO. 199/01/2014-ITA.I; Dated: January 20, 2014
CBDT Order in F. No. 199/03/2013-ITA.1 Dated: January 28, 2014