BCCI IN A FIX OVER SERVICE TAX

Undecided if it will pay the 12.36% tax on behalf of cricketers & other professionals who render services

By Qaiser Mohammad Ali in New Delhi

March 31: WITH only three days left for the money-spinning Indian Premier League (IPL) to begin, the Indian cricket Board said that it was still undecided on paying the 12.36 per cent service tax in addition to the match fee of players.

IPL is one of the biggest sources of income for players as well as the Board of Control for Cricket in India ( BCCI), the richest cricket body in the world.

On March 29, BCCI service tax consultants held a workshop for north and central zone state associations at the Ferozeshah Kotla here in New Delhi, but BCCI treasurer Ajay Shirke said that the Board was still undecided on whether to pay the service tax on behalf of players’ match fee and their share of annual BCCI profit.

Ideally — and as per normal practice — the BCCI should be paying service tax on behalf of cricketers, besides the match fee, much like consumers pay excise duty and VAT etc. in addition to the cost of any product.

The service tax for sportspersons came into effect on July 1 last year. Shirke emphasised that the BCCI would indeed abide by the law of the land. “The Board is yet to decide if it will pay the Service Tax amount of players. We are still considering that. But whatever taxes are due to the government will be paid by the Board,” Shirke told MAIL TODAY.

“For paying the service tax, players will first have to be registered with the relevant tax authorities [department of revenue of the ministry of finance],” said Shirke, who is also president of the Maharashtra Cricket Association.

All professionals earning more than Rs.10 lakh annually will have to pay service tax.

The BCCI itself has been paying service tax. As per its records, the Board, as on March 31, 2012, accounted for Rs.25.30 crore as service tax on input services it had received. 

And as on March 31, 2011, it was Rs.7.69 crore.

The BCCI shares with players 26 per cent of its total profit every year. For the year ending March 31, 2012, the Board shared Rs.47.49 crore of its profit with the players.

Besides, BCCI pays players for representing India as well as their state teams that compete in various domestic tournaments. During a home series, a player gets Rs.7 lakh for a five- day Test match, Rs.4 lakh for an ODI, and Rs.2 lakh for a Twenty20 International. For overseas tours, players are paid a lump sum amount. A player appearing for his state gets Rs.10,000 per match day.

The Board also awards central contracts to top players on an annual basis. A total of 37 players given contracts in October last year in Grade A ( 9 players are getting Rs.1 crore each), Grade B (8 are getting Rs.50 lakh each) and Grade C (20 are getting Rs.25 lakh each).

Asked if the BCCI would facilitate players in filing Service Tax, Shirke said: “If players seek out our help, we will help them.”

Pratik Jain, partner, KPMG (Service Tax), said that players’ salaries that they receive from companies (not BCCI) would not be levied service tax. “Any income which is not a salary or is not towards sale of a product, service tax will be levied on it,” Jain told MAIL TODAY.

After being extended a few times following representations to the government, the deadline for paying service tax for the first quarter — July to September 2012 — was extended and now it has been set as April 25.

Before last year, service tax was applicable on only those services that were specified under the Finance Act 1994. Services by sportspersons were not a specified service, so didn’t have to pay this tax. Last year, the government replaced the ‘positive list’ with a ‘negative list’ to remove confusion.

(This story first appeared in Mail Today, New Delhi/Chandigarh)