BCCI and state associations join hands to beat the taxman


Reeling under a heavy tax burden, the BCCI is entering into a contract with its state associations— a ‘first’ in its 84-year history to reduce the load and avoid double taxation on its income that mainly comes from media rights and the lucrative Indian Premier League (IPL).

This contract, being concluded on a recommendation of a specially constituted Task Force to suggest ways and means to get out of the recurring tax issues, will encompass all the financial exchanges between the BCCI and its constituent units.

The measure was necessitated as authorities have been levying taxes twice, the gross revenues of the BCCI and the 70 per cent of that which it shares with its state associations – a case of double taxation.

Soon, once this contract is concluded, both the BCCI and its affiliated units are expected to heave a sigh of relief, provided the tax authorities accept the Board’s plea that its revenues should not be taxed twice.

A BCCI team, comprising Ratnakar Shetty, general manager (game development) and IPL COO Sundar Raman, tried to explain the same point at a recent meeting with the Commissioner of Income Tax, Mumbai, and also sought an “absolute stay” of the balance taxes due.

They stressed that while assessing BCCI’s income, the tax department should deduct 70 per cent of the Board’s gross revenues that it distributes to its 25 associations (excluding its five full members, including government agencies).

Besides, as per the Task Force recommendations, the Board will continue to file appeals against the taxes levied, and avoid filing a writ petition in the Bombay High Court.

According to sources, the commissioner promised that if the BCCI pays Rs.300 crores, he would grant a stay on the balance demand until the appeals filed by the Board with the Commissioner’s office are decided.

“The Ajay Shirke-headed Task Force, on the advice of tax professionals, recommended that the Board pay the Rs.300 crore in tax for different assessment years,” a source told Mail Today. When contacted, Shirke, who resigned in May over the IPL fixing scandal, said about 375 crore of tax was filed for two years.

“We deposited about Rs.125 crore for 2011-12 and about Rs.250 crore for 2012-13. The TDS (Tax Deducted at Source), which the BCCI usually cuts, was worth about Rs.745 crore. But that amount would be adjusted,” Shirke told Mail Today. He, however, pointed out that he now has nothing to do with the tax issues.

The tax authorities had slapped taxes totalling about Rs.2,300 crore for seven years after terming all BCCI activities as “commercial”. This was explained by Board president N Srinivasan at a working committee meeting on February 4, leading to the formation of the Task Force.

The government had granted the BCCI tax exemption, under Section 11 of income tax, on the ground that promoting cricket was a ‘charitable activity’ under Section 2 (15). However, when the BCCI amended its objects, on June 1, 2006, to contribute to athletes/other sports federations, like the National Sports Development Fund, the government withdrew the exemption.

The BCCI now contends that even if the authorities classify its activities as “commercial”, the payments made to its affiliated associations should be deducted from the taxable revenues The authorities have in the recent past re-opened old tax cases, since assessment years 2004- 05, on a variety of reasons.

This forced the BCCI to wake up and take unprecedented measures.

The most interesting of these steps is the contract it is entering with its state associations, which the BCCI says have played “pivotal role” in helping the Board become the richest cricket body, now worth Rs.3,308.31 crore.

Pointing out the contribution of the state associations, the Task Force said that they have been rendering a “plethora of services”, like hosting international and domestic matches, organising coaching camps, training a host of match officials.

“So, when the BCCI shares 70 per cent of its gross revenues with the state associations, tax authorities treat that as their income. We are contending that it is not fair,” said the source.

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