Sportspersons like Sachin Tendulkar and Mahendra Singh Dhoni will soon see a higher rate of tax deduction at source on their match fees and endorsement fee earnings.

The Income Tax Department has decided to hike the tax deducted at source (TDS) rate to 10 per cent, taking the total incidence to 11.33 per cent (including 3 per cent education cess and 10 per cent surcharge), as against the existing incidence of 2.33 per cent, official sources told Business Standard.

A notification in this regard, amending Section 194J of the Income-Tax Act, 1961, is likely to be issued within a week. The notification will put sportspersons in the same category of professionals like doctors, lawyers and engineers.

The revised rate will become effective from the date of the notification and all sports bodies like the Board of Control for Cricket in India (BCCI) will be have to deduct taxes at the new rate while making payments to the players.

Besides the players, the new TDS rate will also apply to all those associated with a sport. These include professionals like team managers, coaches, match referees, umpires, groundsmen, curators, administrators, physical trainers, physiotherapists and psychologists.

In effect, if a sportsperson earns Rs 1,00,000 as match fees, the payer will deduct Rs 11,330 at the source. The player can claim a refund on the amount deducted as part of his annual income-tax return.

At present many sports bodies do not deduct tax at source, although the BCCI does so at an incidence of 2.33 per cent.

The move to issue a notification for deducting TDS at a higher rate comes after earlier efforts by the Income-Tax Department to persuade sports bodies to deduct the tax, and at a higher rate.

The department stepped up its efforts in this regard after the Indian Premier League (IPL) became a money-spinner for all stakeholders. A sense of what lies at stake can be had from the fact that the tax authorities expect to collect Rs 200 crore from IPL matches this year.