How Section 80RR helped Sachin Tendulkar save ₹58 lakh in income tax

Nearly a decade ago, at the peak of his advertising popularity, Indian men's team cricketing legend Sachin Tendulkar used Section 80RR to save ₹58 lakh in taxes on income earned from abroad. More recently, TaxBuddy founder Sujit Bangar took to the social media platform X (formerly Twitter) to explain how the Master Blaster's tax strategy worked.

Bangar, in multiple posts, explained how Sachin Tendulkar was able to claim the tax deduction by separating his income into earnings from two professions.

What Happened?

As per multiple media reports, in tax filings for AY2001–02 and AY2004–05, Sachin Tendulkar claimed a 30% deduction under Section 80RR on ₹5.92 crore of earnings from abroad, and defended against a tax demand from the authorities on the same.

As per Bangar, the cricketing legend earned foreign income of around ₹5.92 crore (in forex) for which he claimed a 30% tax deduction under Section 80RR, which amounts to around ₹1.77 crore. The income was from earnings abroad for advertisements shot for brands such as ESPN-Star Sports, Pepsi and VISA.

Not a cricketer? Here's how Sachin Tendulkar claimed Section 80RR…

Bangar noted that Sachin Tendulkar, in his filings, claimed he “wasn’t a 'cricketer', but an 'actor” —to save ₹ 58 lakh in taxes.” However, a tax officer “slapped a demand and penalty on him”.

So, how did the Master Blaster prove his filings were accurate and win a legal dispute against the Income Tax Department? He started playing international cricket at 16, played for the national Indian team, and was the Wisden Cricketer of the Year in 1997

According to Bangar, Sachin Tendulkar “called himself an actor and that single word changed everything”, adding that the cricketer “proved” that the deductions were sought for earnings attached to acting jobs.

Sachin Tendulkar's view vs I-T Department's stance

Sachin Tendulkar justified his filings by noting that the earnings came from jobs such as “modelling/acting. That’s an actor's profession, and 80RR applies to it.”

While the I-T Dept's stance was that Sachin Tendulkar is a cricketer and “endorsements are incidental. Treat it under Other Sources; no 80RR.”

When hearing the case, the Income Tax Appellate Tribunal (ITAT) read that work as an actor broadly involves “skill, imagination and creativity for aesthetic output” and that “modelling and TV ads qualify” as such, Bangar said.

It also noted that one can “pursue more than one profession” — in this case, that of a cricketer and an actor, and that “the ad income arose from the actor profession”, he added.

Thus, the IATA, in its ruling, allowed the full 80RR claim on foreign endorsements as earned for “artistic performance” and not cricket, Bangar said. Sachin Tendulkar was allowed to claim the ₹1.77 crore deduction, leading to a savings of around ₹58 lakh in taxes.

Source Link: https://www.livemint.com/money/personal-finance/tax-lessons-from-master-blaster-heres-how-sachin-tendulkar-saved-rs-58-lakh-in-income-tax-with-section-80rr-deduction-11761729930863.html

Website Link: https://www.taxbuddy.com/

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