Sachin Tendulkar, the master-blaster, face of MRF bats and inspiration for all, is one of the greatest batsman in cricket history. What if we tell you that he is not a cricketer but an actor? Or he does not play but acts?
Leona Helmsley once said, “We don’t pay taxes. Only the little people pay taxes.” This seems correct as the rich often seem to be evading taxes and flying to tax-haven countries. Where income tax is concerned, the just man will pay more and the unjust less on the same amount of income. Tax complexity itself is a kind of tax. Only the smart find their way for paying less by curating cutting-edge solutions for subsidizing their share of taxes. In this article, we discuss Sachin Tendulkar’s tax saving methods which left everyone in shock.
Sachin Tendulkar claimed deduction of around Rs. 5.92 crores received by him in convertible foreign exchange from different companies. This deduction was claimed under Section 80 RR of the Income Tax Act, 1961. Section 80RR provides that if a person is a select professional, i.e., an author, playwright, artist, musician, actor, or a sportsman and he receives income from a foreign source, then authorities won’t tax the entire income if he earned this money whilst exercising his profession.
The Assessing Officer rejected this claim of Sachin. The ground of rejection was that Sachin was a professional cricketer. Next, he did not derive the income from modelling and advertising from the exercise of his profession. By endorsing any products in advertisements, Sachin did not become a person whose profession was acting. Sachin appealed against this order.
Arguments advanced by Sachin
Sachin’s counsel submitted that Sachin derived:
• income from salary, income from other sources as a cricketer and
• income from modelling/sponsorships shown as “income from business/profession”.
He submitted that Sachin is not a professional cricketer. His only profession is that of an actor. Further, under Section 80RR a person can have more than one profession.
His counsel referred to other decisions of the tribunal where high degree of imagination, creativity and skill constituted the profession of actor. For example, a dress designer was held as an artist. In another case, Amitabh Bachhan was also held an actor in KBC.
Final Decision of Tribunal
The categories of persons to whom Section 80RR allows a deduction are
(v) actors; and
(vi) sportsmen, including athletes.
Sachin while appearing in advertisements and commercials, has to face professional lights and camera. As a model, he brings to his work a degree of imagination, creativity and skill to arrange elements in a manner. These affect human senses and emotions and have an aesthetic value. No doubt, being a successful cricketer, it has added to his brand value as a model. But the fact remains that Sachin has to use his own skills, imagination and creativity.
Every person or for that matter every sportsman does not possess that degree of talent or skill or creativity to face the lights and camera, etc. The income received by Sachin from modelling and appearing in T.V. commercials and similar activities can be termed as income derived from the profession of “an artist”. There is no bar on the part of Sachin to have a second profession as an artist apart from playing cricket.
Thus, the income of Rs. 5.29 crores was exempted under Section 80RR as income received from work as an artist.
Laurence J. Peter rightly said that few of us ever test our powers of deduction, except when filling out an income tax form. Sachin Tendulkar performed this saying well and showed us all a glaring example. Of course, taxes seem a burdened liability. The only way out is to save them through means and modes prevailing in current times. The beauty of arguments paved the way for the Tribunal to give in and finally decide in Sachin’s favour.