Cricke-t-axes Cricket from the view point of Tax

You hear the word Cricket and your brain clicks away a thousand images, images since you were little to the present time, images since you first learnt how to hold a bat to the image of your tiny fist cupping the ball securely in your baby grip. It all comes out all too naturally the see the jam packet stadium, the bright daylight, the roaring of the crowd, the whistles from the stands. There’s just too much passion in this sport for a layman to think about anything apart from winning and grasping the feeling of a proud Indian.

But there are other things as important as the spirit and exuberance of the game, other things which hardly a cricket maniac watching a live telecast on his television would probably ever think. The other word which isn’t as friendly as cricket to the people is “Tax”.

Yes, that’s right just like any other profession even cricket come with tax issues, the Income Tax Department levying taxes on various things that relate to cricket. Let’s suppose its Australia’s tour of India. The only thing that we worry about is will the Indian team perform well and win handsomely in the series scheduled to played across the nation or may be if ever good player is fit and is in form or not. Apart from that nobody pays any attention to any other or rather so many interesting and important aspects of the game. When Australia tours India despite the fact it wins or loses it has to bear the tax burden on the prize money come what may. Nobody wonders about the fiscal policy efforts in promoting the sport. We do enjoy the matches but what about the tax complexities with them? And does anyone ever think about the tax levied on these players and to what extent? It may come to you as a shock that the leading taxpayer is not a businessman or a multi national company MBA graduate or a lawyer or an actor/actress but it’s none other than the personality who is known as the master blaster, Sachin Tendulkar. The IPL has altogether managed to skip the “Tax limelight” very conveniently. The Tamil Nadu Government is thinking on a possible course of action in this respect. Isn’t it a little too late now to levy entertainment tax on the gate collections from IPL? It’s been years the IPL is flourishing and enjoying huge success across the globe, so how come after all these years suddenly a thought crops up as to something thing should be done in this respect. Various young and talented names have come up with the success of this major event but that doesn’t necessarily give it a reason for tax exemption.  

Kolkata HC Ruling

The Kolkata HC after analyzing in detail the sections 2(24), 5, 9, 115BBA, 194E, 194 and 201 of the Income-Tax Act, 1961 came to the conclusion that an alien country playing cricket in India by the high merit of agreement is liable to be charged tax for the prize money irrespective of the fact the team wins or loses. The section 115BBA charges a 10% tax on the income of a country which comes to play in India with the Indian Cricket team. Under Section 158BBA the court ruled that no deduction can be availed, INDCOM had paid an amount to the Team Manager without deduction. If tax is payable under Section 115BBA or 194E the double taxation avoidance agreement that India entered with the following nations namely Australia, New Zealand, Sri Lanka, Kenya and Holland exemption was not given under this provision of the Indian Act. The liability to deduct tax with respect to the incomes of the Umpires and referees was nil in purview of the Section 115BBA as these were neither sportsmen nor non-resident sports associations /or institutions.

Income Tax levied on advertising income 

Section 158BBA charges a tax of 10% on the income earned by non resident sportsperson from participating in the sport or from advertisement or from contribution to the newspaper articles. It also covers guarantee money. Institutions like ICC, PILCOM etc were considered to be association of persons or individuals. Arguments based on extra-territoriality of the Indian Income Tax Act were rejected on the basis of the Supreme Section 10(39) exempts specified income arising from any international sporting event held in India to persons notified by the Central government, if the sporting event involves participation in more than two countries and is approved by the international body regulating the international sport.