Amid the dispute on whether India’s cricket board should pay income tax, authorities are waiting for filing of returns for 2008-09 to assess tax liability of the Board, including its income from money spinner IPL Twenty20 tournament.
However, the assessment process could take at least one year from the date of filing of return by the Board of Control for Cricket in India (BCCI) by September 30.
“We will try to complete the assessment of BCCI’s returns by December 2010 on a fast track,” a tax official said.
Although BCCI is registered as a charitable institution, amendment to the definition of the ‘public utility´ in 2008 gives powers to the assessing officer to deny the tax benefit to the board, an official said, adding cricket, especially the IPL brand, has become commercial.
The Indian Premier League (IPL), which has been described by Home Minister P Chidambaram as a “shrewed combination” of business and sports, is not registered as a separate entity and its income will be reflected in the BCCI’s returns, due before September this year, he said.
IPL, which is hosting its second season in South Africa from April 18, has since renegotiated the 10-year broadcasting rights for over Rs 8,000 crore granting them to Sony and WSG.
Even in the case of Tax Deducted at Source (TDS) on payments to players’ by the IPL franchisees and corporate firms for endorsements, the shifting of the second edition of T20 event to South Africa may result in revenue loss.
This is because the law on TDS on payment to sportspersons leaves a grey area if an event is held outside the country.
Andrew Flintoff, Paul Collingwood and J P Duminy of England, Kevin Peterson of South Africa and Shaun Taint of Australia have been contracted by different IPL franchisees for a total of 4.7 million dollars.
Bulk of this amount is likely to be paid in the current season even though the agreement between the franchisees and the players is for three years, sources said.
Section 194E of the Income Tax Act provides for TDS at the rate of 10 per cent before fee is paid to non-resident sportsperson.
While it specifies that “the income must have been earned by the sportsmen by way of participation in India in any game ... or sports”, it does not deal with an eventuality of an event taking place outside the country.
The IT officials are apprehensive that they may lose TDS in the current IPL season beginning April 18 in different South African cities. The exchequer collected Rs 91 crore TDS during the first season of IPL last year.