BCCI earning a Multi-Crore Revenue, Don't Pay Tax why ?

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Disclaimer: The following article provides insights into the tax implications of the Indian Premier League (IPL) income for the Board of Control for Cricket in India (BCCI). Readers should note that tax laws and interpretations are subject to change, and the views expressed herein are based on the information available at the time of writing.



Why the BCCI Doesn't Pay Tax on IPL Income

Every year, the Indian Premier League (IPL) captivates cricket enthusiasts with its thrilling matches and hefty financial dealings. Despite the immense sums involved in the league, have you ever wondered whether the IPL's governing body, the Board of Control for Cricket in India (BCCI), is subject to significant taxation on its IPL earnings? Surprisingly, the answer is no. IPL income is not subject to tax.

In a significant development last year, the Income Tax Appellate Tribunal (ITAT) ruled in favor of the BCCI in an appeal filed against three show-cause notices issued by the revenue department in 2016-17. The tribunal upheld the BCCI's argument that IPL revenue, although substantial, contributes to the promotion of cricket, thereby qualifying for tax exemption under Section 12 A of the Income Tax Act. This decision, issued on November 2, 2021, affirmed that as long as IPL profits are utilized to further the BCCI's objective of cricket promotion, they are exempt from taxation.

However, it's essential to note that while the BCCI enjoys tax exemption for IPL income, players' earnings from the league are taxable. Despite the revenue department's attempts to challenge the tax exemption status, the tribunal emphasized that the primary objective of promoting cricket remains intact, even with the significant commercialization of the IPL.

The BCCI contended that the income tax department erred in focusing solely on the surplus generated from IPL activities without considering the broader scope of the cricket board's promotional efforts. According to the BCCI, activities related to IPL contribute to the overall promotion of cricket and therefore warrant tax exemption.

In response to queries regarding the tax exemption status of the BCCI, Minister of State for Finance Pankaj Chaudhary stated that the Income Tax department has denied tax exemption under Section 11 of the Income Tax Act to the cricket board, and the matter is currently under judicial review. Section 11 pertains to charitable institutions.

In conclusion, while the BCCI benefits from tax exemption for IPL income due to its promotion of cricket, the matter remains subject to legal scrutiny. The complexities of tax law interpretation underscore the importance of ongoing monitoring and review of tax implications in sports governance.






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