IPL Auction 2025: Tax Implications for Rishabh Pant, Mitchell Starc, and Vaibhav Suryavanshi

The IPL 2025 Auction reaffirmed the league’s reputation as one of the most lucrative cricket tournaments globally. With record-breaking bids, the event showcased how top players command staggering salaries. Among the highlights:

• Rishabh Pant became the most expensive IPL player in history, signing with Lucknow Super Giants for Rs 27 crore over three seasons.
• Australian pacer Mitchell Starc was acquired by Delhi Capitals for Rs 11.75 crore.
• A rising star, 13-year-old Vaibhav Suryavanshi from Bihar, secured a contract worth Rs 1.10 crore.

While these contracts bring immense financial rewards, they also come with significant tax implications. Here’s a breakdown of how these players’ IPL salaries are taxed:

1. Taxation of Indian Players

Indian players like Rishabh Pant fall under the Indian tax system as residents. Their IPL earnings are treated as professional income and taxed based on their total annual income.

• Tax Rate:
  High-income players, such as Pant, fall into the 30% tax slab plus surcharge and cess.
• Tax Deductions:
  Any expenses incurred in connection with their profession can be claimed as deductions.
• Pant’s Case:
  From his Rs 27 crore contract (spanning 2025–2027), Pant will pay Rs 8.1 crore in taxes. His net earnings from the IPL contract will be Rs 18.9 crore over three years.
• Payment Terms:
  The contract amount is spread across three seasons, and players receive payments only for seasons they participate in. If injured during the tournament, the player still receives full payment. However, pre-tournament injuries could allow the franchise to replace the player.

2. Taxation of Foreign Players

Foreign players like Mitchell Starc, classified as non-residents for tax purposes, are taxed differently:

• Tax Laws Applicable:
  Under Section 115BBA of the Income Tax Act, foreign players are taxed at a flat rate of 20% on income earned in India, including match fees, endorsements, and related activities.
• Tax Deducted at Source (TDS):
  A 20% TDS is deducted before payment, and they are not required to register for a PAN in India.
• Double Taxation Relief:
  Foreign players may benefit from Double Taxation Avoidance Agreements (DTAA) between India and their home countries, potentially reducing their tax burden abroad.
• Starc’s Case:
  Starc’s IPL salary of Rs 11.75 crore will face a 20% TDS deduction, leaving him with a net payout of Rs 9.4 crore, subject to his home country’s tax laws.

3. Taxation of Minors: Vaibhav Suryavanshi

At just 13, Vaibhav Suryavanshi’s IPL contract raises unique tax questions. Here’s how his earnings will be taxed:

• Earned Income:
  Earnings from personal skills, such as cricket, are taxed in the minor’s name. For Vaibhav, the Rs 1.10 crore will be treated as earned income and taxed as per individual income tax slabs.
• Unearned Income:
  Passive income like interest or dividends in a minor’s name is clubbed with the parent’s income (with the higher earnings) under Section 64(1A). Parents can claim a tax exemption of Rs 1,500 per child under Section 10(32).
• Income Tax Return (ITR) Filing:
  Minors earning above the basic exemption limit must file an ITR. In Vaibhav’s case, his parents will act as his representative assessees, overseeing compliance.
• Special Provisions:
  Income arising from personal talent (e.g., sports) is not clubbed with a parent’s income and is always taxed in the minor’s own name.

Other Tax Compliance Measures

• For payments to foreign players or NRIs exceeding Rs 5 lakh, the deductor must obtain Form 15CB (issued by a Chartered Accountant) and submit it with Form 15CA to certify TDS compliance.

Key Takeaways

• Rishabh Pant will receive Rs 18.9 crore after tax deductions from his record-breaking IPL contract.
• Mitchell Starc will pay 20% TDS on his earnings but could benefit from DTAA agreements.
• Vaibhav Suryavanshi, despite being a minor, will be taxed as an individual, and his earnings will require ITR filing under his PAN.

As IPL salaries continue to climb, understanding the nuances of taxation becomes essential for players to maximize their take-home pay while complying with legal obligations.