How much tax does a cricketer have to pay on a car gifted to him? What are the rules?

Tax on Car Gifts to Cricketers: Cars and other luxury items received as gifts by cricketers are not completely tax-free. Under income tax rules, they are subject to tax on their actual value.

This season of the Asia Cup saw the brilliance of young Indian batsman Abhishek Sharma. From the start of the tournament until the final, his aggressive batting not only thrilled the spectators but also created problems for the opposition bowlers. Thanks to this outstanding performance, Abhishek Sharma was named Player of the Match in the final. As Player of the Series, Abhishek was gifted a luxury car, the Haval H9. In this context, let's explore how much tax cricketers have to pay on the cars they receive as gifts and what the rules are.

Not every gift is free

Cricketers in India often receive lavish gifts. Sometimes, for winning a tournament, or sometimes, for their outstanding performance, companies, brands, or industrialists gift them cars, bikes, or other luxury items. However, many people assume these gifts are completely free, but the reality is quite different. In fact, these gifts are taxable. Income tax rules clearly apply, especially in the case of cars or other high-value items.

According to which rule tax has to be paid

According to the provisions of the Income Tax Act, 1961, if a person receives an item as a gift, and it is not from a relative, its market value is added to that person's income. This simply means that if a cricketer is gifted a car, the current market value of that car will become part of his taxable income.

What type of gifts is taxable?

It's important to understand that tax laws differentiate between gifts from relatives and non-relatives. If a cricketer receives a gift from a close relative, such as their parents, spouse, or siblings, it's not taxable. However, if the same gift comes from a company, brand, businessman, fan, or other individual, it's taxable.

What is the Tax rate?

Now let's talk about tax rates. Since most cricketers earn a lot and typically fall in the highest tax bracket, 30 percent, the value of the gift is added and taxed at the same rate. A 4 percent health and education cess is also included. This means a total tax of approximately 31.2 percent.

For example, if a cricketer receives a car worth ₹20 lakh as a gift, he will have to pay approximately ₹6.24 lakh in tax on this gift. This means that even though the car was gifted by someone else, the tax on it will still be borne by the cricketer.

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