Thursday, March 13, 2008

Should we exempt BCCI from tax?

I am no tax practitioner and am not aware of the rules for levying income tax on BCCI and the various state associations. But I learn that they do not pay any tax and enjoy certain exemptions on satisfying some conditions. It is understood that under the existing provisions of Income-Tax Act 1961, the income of an association established with the object of encouraging games like cricket, hockey, football, tennis is exempt from income-tax. BCCI was required to spend 75 per cent of its annual earnings on the game itself or accumulate and spend the aggregate of such amount over five years. The balance 25 per cent was free reserves. BCCI is no longer the board that we knew of in Seventies and Eighties. Today it is a business house selling cricket for profit.BCCI today is a very rich sports body. After the commencement of IPL its revenues will go up to unprecedented levels. The sport has now assumed fully a commercial complexion and the board is ever after new ways to augment the earnings for itself, the media and the players. The common man who forms the bread and butter of this sport is nowhere in the picture in terms of better facilities for viewing , better infrastructure for his children to take part in the sport in all parts of the country or as an ultimate beneficiary by way of taxes paid by the sports bodies to the exchequer. Not much information is available about the earnings of BCCI, its Balance Sheet, how the money garnered is disposed of, who the beneficiaries are and the state of its finances. Although each one of the Indians identify with BCCI as their own sports body, its accounts are strangely not made public. It is an exclusive private body whose financial affairs are beyond the scrutiny of the common man. Yet for purposes of tax exemption it declares itself as a charitable institution for the benefit of common man in the area of sport.
What charity and to whom? I am not aware of the nature and extent of exemption presently allowed to the board. If the government is exempting the income of BCCI from tax, it is expected that the government would be interested to know how much income BCCI is making and how much of it is spent towards common benefit. If the exemption is allowed on the specious plea that the body is created for development of sport, it behoves on CBDT to find out how much of its revenues has gone to build proper infrastructure in India's various cities and made available to the poor children free of cost. As far as one can see, there is not much done to help the encouragement of sports like cricket in the country except fattening the purses of a few with mind boggling fees and facilities for accommodation and travel that are regal in standard.. Except in a few metros and in fewer cities the children lack the facilities to practice and to play. Private academies that cater to rich and famous cannot take away the responsibility of BCCI and state associations in this regard.
There was a proposal to withdraw this tax exemption from these bodies and make it applicable from the assessment year 2003-2004 and subsequent assessment years. It is not known what the actual position is. As a pre-condition to any exemption BCCI should be accountable to tax authorities. Its audited Balance Sheet should be made public and subject to microscopic review. Sadly BCCI that has fallen in the hands of crafty politicians and cunning corporate has now roped in film folks who are all using cricket for their own private agenda. Public cause is alien to all the transactions of BCCI and its partners. The question arises whether the eight new entities of IPL would also make a plea for exemption that BCCI currently enjoys on the ground they are all working for development of sports. The Finance Minister should examine de novo whether the huge amount that BCCI would receive from IPL and from the TV companies for media rights would attract the benefit of exemption. Tax authorities should review whether the conditions for exemption of tax have been fulfilled by BCCI in the last ten years and where there is failure tax at applicable rates should be levied. This apart a fresh view should be taken for the continuance of any exemption. The tax authorities should also decide the guidelines for treating as allowable expense for its various activities. They should also be brought under the rigours of scrutiny like public companies. The Board should be derecognized as a charitable society and treated as a private company. Gone are the days when players were paid pittance for the trouble of playing matches. They earn these days in crores.It would be gross inequity if they are allowed any concession different from what are available to all professionals. The joke of treating them differently should be put an end to. Taxes should be deducted at source mercilessly as in the case of all small time salary earners for payment to players, coaches, referees etc. The governments which make available land for building stadium or for rent should charge them at the ruling market rates.

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