Every year, IPL puts everyone on the edge of their seats with its nail-biting and entertaining matches. And the crores of money involved in the league, from auctions to sponsorships, makes it a mega event in our cricket-crazy country.
But have you ever wondered, does IPL's founding body the BCCI pay a hefty tax on this multi-crore Indian Premier League (IPL)? The answer is, no. Surprisingly, IPL is not liable to tax.
Last year, the Income Tax Appellate Tribunal (ITAT), in an appeal filed by the BCCI (Board of Control for Cricket in India), upheld the arguments of the sports body.?It stated that even though it's making money through the IPL, the objective of promoting cricket remains intact and hence its income should be exempt from tax. The decision came in a November 2, 2021 order by the tribunal.
So, as long as the IPL profits are used for the BCCI's objective of promoting cricket, it is entitled to claim exemption, as per live law.
But as far as players are concerned, income from IPL is taxable.
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BCCI had approached the Mumbai bench of the ?Income Tax?Appellate Tribunal against three show-cause notices issued by the revenue department in 2016-17 to explain why the tax exemption that the BCCI enjoys under Section 12 A of the Income Tax Act, should not be revoked for generating income through the IPL, as per a report in ET.
While rejecting the contention of the revenue department, the bench of judicial member Ravish Sood and vice president Pramod Kumar reportedly said "On the face of it, merely because a sports tournament is structured in such a manner so as to make it more popular, resulting in it in more paying sponsorships and greater mobilisation of resources, the basic character of activity of popularising cricket is not lost."?
According to the BCCI, the income tax department "erred" in emphasizing the surplus generated from activities pertaining to IPL, without considering the overall activities of the appellant (cricket board) in a holistic manner and wrongly concluding that these don't qualify as sports promotion, as per ET report.
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