Can Grandmaster D Gukesh save his Rs 114500000 prize from hefty taxes? Find out here…

New Delhi: India’s Grandmaster D Gukesh, captured attention by clinching the 2024 FIDE World Championship title and securing a remarkable Rs 11.45 crore in prize money. His outstanding victory has brought immense pride to the nation. However, a critical issue looms: how much of this prize will he retain after tax deductions?

Let’s analyze the situation. As per Indian tax regulations, Section 10(17A) of the Income Tax Act, 1961, offers tax exemptions for awards or rewards—whether in cash or kind—if they are presented by the Central Government, a State Government, or a body recognized by the Central Government. Unfortunately for Gukesh, his prize was awarded by the International Chess Federation (FIDE), which does not qualify under this provision. As a result, he won’t be eligible for this exemption.

So, what does this imply for his earnings? According to CA (Dr.) Suresh Surana, prize money from competitions is taxed at a fixed rate of 30%, irrespective of any other income he may earn. For Gukesh, this tax extends beyond the base rate. Under India’s revised tax system, a 25% surcharge and a 4% Health and Education Cess push his total tax rate to 39%. Consequently, his tax liability would be around Rs 4.46 crore.

The situation could become even costlier under the previous tax regime, where the highest surcharge is 37%, increasing the effective tax rate to 42.744%. This would result in even higher taxes on his hard-earned prize money.

Despite the significant deductions, Gukesh remains humble. In interviews, the 18-year-old has modestly dismissed his “multi-millionaire” label, stating that the chessboard is still his “coolest toy.” His journey serves as a reminder that even with the complexities of tax laws, passion and perseverance are the true rewards of success.