1. I am an international swimmer and I have been endorsing a sportswear brand for the past 2 years. Recently I was approached by a luxury retail brand for a sponsorship deal. Given my affiliation with the sportswear brand, am I permitted to accept the sponsorship offer made by the retail brand?
You will be required to carefully review your contract with the sportswearbrand to determine the categories in which exclusivity has been granted to the sportswear brand. If exclusivity has been granted only in the category of sportswear(and not other apparel), then you may accept the sponsorship offer made by the luxury retail brand. However, if the exclusivity granted extends to all apparel in general, then you may not accept the offer made by the luxury retail brand, or any other apparel brand during the time the contract with the sportswear brand subsists.
2. I am an American citizen and I recently won a long-distance running competition in India for which I was awarded a sum of Rupees Thirty Thousand. Will there be any tax deductions on this amount in India?
As per the India-USA Double Taxation Avoidance Treaty, your income from prize money, which has been earned in India, is taxable under the Indian Income Tax Act of 1961. The Act provides that in case of athletes participating in sporting events, all income accrued or received in India is taxable in India. Therefore, as per Section 115BBA of the Act, your winnings will be liable to a ten percent deduction of tax at source in India. You will be entitled to receive documentary proof of the tax deduction and will likely be able to set off the tax credit against your U.S. taxes.
3. We are a sportswear brand and we would like to launch a nation-wide promotion where customers buying products worth over Rs. 1000 would automatically be entered into a lucky draw to win a grand prize of a gift hamper of Rs. 50,000 in clothing. Are there any legal restrictions that we need to be aware of?
Please note that you may not conduct this promotion in your retail outlets in the state of Tamil Nadu due to the applicability of the Tamil Nadu Prize Schemes (Prohibition) Act, 1979. This Act bans conduct of prize schemes wherein purchase of the product is a necessary condition to participate in the promotion. Other states may also outlaw such prize competitions if they feel this constitutes a lottery (a game of chance) or where the prize was being funded via the entry purchase component of the promotion. The other issue to keep in mind is that tax shall be payable by the prize winner on the prize (given that it is of material and not de minimis value) and you may need to deduct tax at source when issuing the prize to the winner.
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