IPL still faces googlies from income tax dept

While the Indian Premier League (IPL) season may have ended for the year, its tax woes are yet to settle down. The income tax department has now set up a special committee to look into the various tax-related issues surrounding the IPL and the Board of Control for Cricket in India (BCCI).

The panel, comprising income tax officials from the Mumbai commissionerate, is examining the tax liability of foreign cricketerswho played the T20 matches, of the IPL as well as that of the BCCI, sources close to the development said.

“The committee will look into the applicability of tax deduction at source (TDS) provisions on the payments made to the cricketers,” the source said. Section 195 of the Income Tax Act, 1961 deals with the TDS provisions relating to payments (other than salaries) made to non-residents.

It may be recalled that payments to many Australian cricketers were earlier deferred due to confusion over their income tax liability in India.

The committee is also examining whether the BCCI, which is registered as a charitable organisation, is eligible for tax exemptions after the changes made in the Budget this year. The Budget has streamlined the definition of charitable purpose by excluding exemptions to trusts involved in activities and services in the nature of trade. As reported by FE earlier, the income tax department has been uncertain of its tax treatment ever since.

BCCI in fact may have to shell out over Rs 1,200 crore over a 10-year period from its earnings from the IPL tournament, including that from the sale of players and media rights and tournament sponsorship.

Other issues, including the exact tax treatment of the IPL, are also being looked into by the tax panel, which is expected to submit its report to the Central Board of Direct Taxes (CBDT) later during the month.

The CBDT’s stance will then be communicated to all concerned in time for them to file their tax returns, sources added. While the foreign cricketers are expected to file their returns by 30th September, the BCCI will file it by October 31.