Rio Olympics winners Sindhu and Sakshi have no doubt won the fame and name which they deserved. Back in India, PV Sindhu was showered with various awards and a cash reward.
But do they have to pay tax on the awards and prize money?
As per the Central Board of Direct Taxes (CBDT), awards instituted by Central Government, State Government or other bodies can avail tax exemption in respect of awards or rewards covered by such approvals.
Such tax exemption can be claimed by eligible persons in respect of awards or rewards covered by such government or state government.
Earlier, those who received any cash rewards or gift from the government were supposed to pay income tax to the government.
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 Asiangames need not pay any income tax.
Which means the money sanctioned by the central government and various state governments is not taxable.
However, they may have to pay income tax on the awards given by non-government organizations and individuals.
For example, PV Sindhu received BMW car from V Chamundeswaranath, president of Hyderabad Badminton Association of India. Such awards and prize money attracts Income tax.
She also won around 13 crore cash rewards from various central, state and other private organization. For such awards, cash reward presented by individuals and private organizations can be considered be for tax purpose.