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House panel to probe tax evasion by IPL team-owners, Board

The Parliamentary Standing Committee on Finance will meet on Wednesday to discuss issues linked to possible tax evasion by organisers and teams of the Indian Premier League. Gaurav Choudhury reports.

business Updated: Jul 13, 2010 23:29 IST
Gaurav Choudhury

The Parliamentary Standing Committee on Finance will meet on Wednesday to discuss issues linked to possible tax evasion by organisers and teams of the Indian Premier League (IPL).

There are indications that the Department of Revenue has unearthed strong evidence of tax evasion, particularly on the service tax front, by several service providers to the popular cricket league.

"As per information received from major field formations, show-cause notices involving an amount of Rs 33.34 crore have been issued to various service providers and stakeholders in relation to IPL," said a note prepared by the Finance Ministry.

The Board of Control for Cricket India (BCCI) and the Indian Premier League (IPL) are liable to make the payments on the franchise fees they received from the eight team owners.

In addition, BCCI and IPL are also liable to pay service tax on the payments remitted to IMG-UK as consulting fee for the marketing and brand-building services provided by them.

Teams are liable to pay service tax on revenues earned by the sale of advertisement space during match, while BCCI–IPL are liable to pay service tax on their income from the sale of game rights, according to the finance ministry.

"As far as customs, central excise and service tax are concerned, tax exemptions are given in public interest to goods manufactured in specific areas and industrial sectors or to specified goods and services," it said.

"No tax exemptions of deductions are extended to specific corporates, registered bodies, including high profile bodies such as BCCI and IPL," it said.

These details have emerged after the government launched a multi-agency probe amid swirling allegations of financial irregularities and murky deals in the cricket league.

In a report tabled in Parliament in April, the standing committee had noted that IPL and franchisees have paid Rs 200 crore as taxes till the fist week of March for incomes pertaining to the current season.

The total tax deducted at source till the first week of March, 2010 by BCCI and the IPL franchisees is close to Rs. 200 crore, it said.

In 2007-08 the taxable income of BCCI was estimated at Rs 314.47 crore. Tax assessment proceedings for the subsequent years are pending.

The department said no specific tax exemptions were granted to IPL or BCCI.