Slapped with notices to pay a whopping sum of more than Rs. 500 crore as arrears to income tax authorities, the Indian cricket board is gearing up to shift the burden to its affiliated state units.
BCCI president N Srinivasan recently held a meeting of representatives from various state associations and asked them to stay prepared to pay taxes. Srinivasan was accompanied by tax consultants in the meeting.
“Yes, we’ve been asked to get ready to pay our share of tax on the income we receive from the board,” an official present in the meeting told HT.
Revenue earned through telecast rights of matches is the prime source of income for the BCCI.
As per the income distribution arrangement of the BCCI, 70% of the revenue earned is given to the state association hosting the match while 30 % is retained by the Board.
“As we get 70% of the revenue, Srinivasan suggested we should pay taxes on our share after meeting our expenses while the board will pay taxes on the remaining 30 % after deducting its expenses,” added the official.
An RTI application filed with the IT department has revealed that the BCCI owes `550 crore in arrears. The figure could be much higher once the department makes the assessment for 2011-12 and 2012-13 as the BCCI co-hosted the World Cup in 2011.
Earlier, the Board enjoyed tax exemption under section 11 of the IT Act on the ground that promoting cricket was a ‘charitable activity’ under section 2 (15).
However, when the BCCI had amended its objectives in 2006 and did not inform the tax authorities, the IT department withdrew the exemption. Besides, the board came under the scanner of the tax authorities once it started raking in the moolah through the domestic T20 league.