Do IPL players pay tax? Explaining how salary cap, deductions cut into player incomes

Australian all-rounder Cameron Green became the most expensive overseas player in the Indan Premier League (IPL) history after Kolkata Knight Riders secured his services for a striking ₹25.20 crore during the mini auction in Dubai on December 16. 

Yet behind the headline number lies a far more sobering financial reality that will drive home the actual figures behind the mammoth bid. 

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Once deductions are applied, Green will take home approximately ₹18 crore, with further adjustments later reducing his effective earnings even further.

What is BCCI's Maximum Overseas Fee?

The BCCI was concerned by a growing trend of overseas stars skipping mega auctions and returning during mini auctions.

This was a ploy designed to exploit scarcity-driven bidding wars. Hence, the league implemented a “maximum fee” mechanism for foreign players, which now restricts their earnings to INR 18 crore, despite a franchise bidding more for them.

The remaining fee will be allocated to the PWF (Payer Welfare Fund), which is overseen by the BCCI. 

What is the Tax Divide Between Indian and Overseas Players?

Taxation plays an even larger role in shrinking Green’s final pay. IPL earnings are classified as professional income, meaning franchises must deduct tax at source.

However, Indian and overseas players are treated very differently under Indian tax law. Indian players fall under Section 194J, with a lower 10% TDS that is later adjusted against their annual income tax returns.

Whereas foreign players are classified as non-residents and are taxed under Section 115BBA. This applies a flat 20% TDS, followed by surcharges and cess that push the effective rate even more. 

For example, a payment of above INR 5 cr will attract a 25 % surcharge on TDS. Whereas, a cess of 4 % will also be applied on TDS.

How much will Cameron Green actually take home?

In Green’s case, deductions begin with the league’s financial structure and the higher overseas tax rate.

The Indian Government will tax him on INR 18 crore. A TDS of 20 per cent will erode away INR 3.60 crore, a surcharge will eat away 90 lakhs, and Cess will further take away 18 lakhs. 

So, he is taking home around INR 13.32 crores from Indian shores, which will further be taxed in Australia.

However, under the India–Australia Double Taxation Avoidance Agreement, Green will offset the INR 4.68 crores paid in taxes in India. But he still faces income tax and the Medicare levy back home, further reducing his net earnings.

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