20- 20 IPL Cricket and Income Tax – are players ‘Stock in trade' or assets?
In the thick of IPL auctions, you must have heard of Dhoni being bought for Rs. 6 Crores or Preeti Zeinta buying up some other player. Now it's time for the Income Tax Department to enter the scene.
The first controversy is about TDS paid on the amounts paid to the players. Is the TDS to be made at 11% or 2%? Are Cricketers professionals? Now the understanding seems to be that the TDS has to be 11.33% (including the all pervasive cess – for education)
What will happen when players are traded? Vijay Mallya was not happy with his team and apparently, he would like to buy a few players, if he has his way. If he has his way, what would be the ‘will' of the Income Tax Department?
Are the players “Stock in trade” or are they “assets” (including liabilities)?
If they are ‘stock in trade' a transfer of a player from one team to the other would be ‘sale' and liable to tax. If they are to be treated as assets, the sale would attract capital gains tax.