Even legends like Sachin Tendulkar have a keen eye for financial strategy beyond the cricket pitch. Nearly a decade ago, at the peak of his advertising career, the 'Master Blaster' showcased a brilliant move in tax planning, saving a substantial ₹58 lakh in income tax. This wasn't just about earning big; it was about smart income classification and leveraging specific tax provisions, a lesson that holds relevance for every professional looking to optimize their finances.
The crux of Tendulkar's strategy lay in Section 80RR of the Income Tax Act. He earned approximately ₹5.92 crore from abroad through advertisements for global brands like ESPN-Star Sports, Pepsi, and VISA. Crucially, instead of declaring this income purely as a 'cricketer,' he categorized it under the 'actor' profession. Section 80RR allows a deduction for professionals like authors, artists, musicians, and actors who earn foreign income in convertible foreign exchange. While the Income Tax Department initially challenged this, arguing his endorsements were incidental to his cricketing profession, the Income Tax Appellate Tribunal (ITAT) sided with Tendulkar. The ITAT acknowledged that one could pursue multiple professions and that modelling and TV ads indeed qualify as artistic performance, allowing him a 30% deduction on his foreign earnings.
Sachin Tendulkar's case offers invaluable insights for all of us. Firstly, it highlights the immense power of truly understanding tax deductions and how different income streams can be classified under specific provisions. Many professionals today have have diverse sources of income – whether from consulting, content creation, or side hustles – and knowing how each can be optimally reported is key. Secondly, it underscores the importance of staying informed about tax laws and, when necessary, seeking expert advice to ensure your financial planning is not just compliant, but also maximally efficient. At Fabits, we believe in empowering you with the knowledge and tools to make your money work smarter, just like a master strategist on and off the field.
