TDS on Non-Resident Sports Payments and National Savings Scheme Withdrawals

The Income-tax Act, 2025 applies from 1 April 2026. Non-salary withholding provisions are consolidated in Section 393, including specified income of non-resident sportsmen, entertainers and sports associations and other categories previously governed by separate TDS sections.

Current TDS framework: Payments or credits on or after 1 April 2026 are governed by the corresponding Section 393 table item. Payments or credits on or before 31 March 2026 remain governed by the Income-tax Act, 1961.

Non-resident sportsmen, entertainers and sports associations

Section 393(2), Table Serial No. 1 of the Income-tax Act, 2025 covers income referred to in Section 211 payable to a non-resident sportsman, including an athlete, or an entertainer who is not a citizen of India, or a non-resident sports association or institution.

The Income-tax Rules, 2026 assign section code 1039 to this category for TDS reporting. The person responsible for the payment is the deductor. The applicable tax rate must be read with Section 211, Section 393 and the Finance Act for the relevant tax year.

What income is covered?

The special provision concerns the categories of income specified for non-resident sportsmen, entertainers and sports associations or institutions. Before deducting tax, the payer should identify the status of the payee, the character of the payment and whether Section 211 applies.

Timing of deduction

For withholding provisions operating on the earlier-of-credit-or-payment principle, the transition date is determined by whichever event occurs first. This is especially important for arrangements spanning March and April 2026.

Legacy Section 194E of the Income-tax Act, 1961

Legacy law: Section 194E applies to a payment or credit governed by the 1961 Act. It covered income referred to in old Section 115BBA payable to a non-resident sportsman, including an athlete, a qualifying entertainer who was not an Indian citizen, or a non-resident sports association or institution.

Under the legacy provision, the payer deducted income-tax at the earlier of credit or payment. The uploaded historical text records a statutory rate of 20 percent. For an actual pre-1 April 2026 transaction, the applicable Finance Act, surcharge and cess consequences should also be checked for that period.

National Savings Scheme payments

The old Section 194EE dealt with specified payments in respect of deposits under the National Savings Scheme linked to old Section 80CCA. Because this is a legacy savings-scheme provision, its practical application depends on the particular deposit, withdrawal and transition provisions applicable to the account.

Legacy Section 194EE: deposits under National Savings Scheme

Legacy provision: Section 194EE required the person responsible for paying an amount referred to in old Section 80CCA(2)(a) to deduct tax at the time of payment. The provision contained a monetary threshold and an exception for payments to the heirs of the assessee.

The uploaded text records a 10 percent TDS rate, a Rs. 2,500 threshold and an exclusion for payment of the specified amount to the assessee's heirs. These figures describe the legacy provision and should not be treated as a general rule for unrelated modern savings products.

Transition from the 1961 Act to the 2025 Act

Payment or credit event	Applicable law	Reference
On or before 31 March 2026	Income-tax Act, 1961	Section 194E or Section 194EE, where applicable
On or after 1 April 2026	Income-tax Act, 2025	Relevant Section 393 table item
Specified non-resident sports or entertainment income	Income-tax Act, 2025	Section 393(2), Table Serial No. 1, read with Section 211

Payments to non-residents: reporting and remittance

Payments to non-residents may also require compliance with the prescribed remittance and reporting framework. The Income Tax Department provides Form 145 for information concerning payments to a non-resident, not being a company, or to a foreign company, and Form 146 for the prescribed accountant's certificate where applicable.

Practical compliance checklist

Identify the payee: confirm whether the recipient is a non-resident sportsman, entertainer, sports association or institution.

Identify the income: determine whether the payment falls within the special sports or entertainment income provision.

Apply the transition date: establish whether the relevant payment or credit falls before or after 1 April 2026.

Use the correct current code: for qualifying post-1 April 2026 sports payments, use Section 393(2), Table Serial No. 1 and the prescribed reporting code.

For NSS withdrawals: verify the particular scheme, deposit history and applicable statutory provision rather than assuming every savings withdrawal is covered by old Section 194EE.

Related Income Tax provisions

Insurance commission and life-insurance policy payments: Sections 194D and 194DA

Payments to contractors: Section 194C

Repurchase of units and lottery-ticket commission: Sections 194F and 194G

Commission, brokerage and immovable property TDS: Sections 194H and 194IA

For current transactions, verify the exact rate, threshold, surcharge, cess and reporting requirement under the Income-tax Act, 2025, the Finance Act and the Income-tax Rules, 2026.