His outstanding achievements made the entire country proud. However, a burning question arises: How much of his winnings will he actually keep after taxes?
India’s young rising chess star D. Gukesh recently made headlines for winning the 2024 FIDE World Championship and receiving a staggering prize money of Rs 1,145 crore. His outstanding achievements made the entire country proud. However, a burning question arises: How much of his winnings will he actually keep after taxes?
Let’s break it down. Under the Indian tax laws, Section 10(17A) of the Income Tax Act, 1961 provides that awards or incentives (whether in cash or in kind) are tax-free if granted by the Central Government, State Government or a recognized organization. Unfortunately for Gukesh, the prize he received was awarded by the International Chess Federation (FIDE) and did not fall into this category. This means he will not benefit from this exemption.
So, what does this mean for his winnings? As per CA (Dr.) Suresh Surana, income from prizes or games is taxed at a flat rate of 30% irrespective of any other income he may have. For Gukesh, the tax is not limited to the basic rate. Under India’s new tax regime, a 25% surcharge and a 4% health and education cess raise his effective tax rate to 39%. This results in a tax bill of approximately Rs 44.60 lakh.
Things could get more expensive under the old tax regime, with a higher maximum surcharge (37%), pushing the effective tax rate to 42.744%. That would mean higher taxes on his hard-earned winnings.
Despite the massive deductions, Gukesh remains humble. In the interview, the 18-year-old modestly rejected his “multimillionaire” label, saying that the chessboard remains his “coolest toy.” His experience reminds us that even when tax laws are complex, passion and perseverance are the true rewards of success.