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Thursday, December 1, 2011

Is tax exemption to BCCI justified - who runs the show and where does the earning go ?

Tomorrow India plays West Indies at Visakhapatnam and after the thrilling first One dayers, expectations are running riot – Cricket as a game of entertainment is certainly great.  The game earns  crores of revenue and where does the gain end up – is it ploughed back for developing the game ? does the infrastructure at various venues get spruced up, is the Spectator who craves for the game and pays so much getting decent facilities in any of the sporting arenas ? does the Nation enrich in any manner ? at least do they get increased tax revenue from running the show ? – you will be startled to know the real answers……………..

In modern World, it is all about glitz, hype, promotion and extravaganza.  India saw all that in the Cricket WC 2011 cohosted by  India, Srilanka and Bangladesh.  Over the years from its inauguration in 1975, the event has grown and this time it was more a media event.  The International Cricket Council had sold the rights for broadcasting of the 2011 Cricket World Cup for around US$ 2 billion to ESPN Star Sports and Star Cricket. At least two billion people from more than 180 countries around the world tuned into the tournament. This was the first time that the ICC Cricket World Cup was broadcast in High Definition format and was covered by at least 27 cameras, including such innovative features as movable slips cameras and new, low 45-degree field cameras.  The ICC Cricket World Cup was also be shown across platforms such as online and mobile 3G.

The official song of the 2011 Cricket World Cup has three versions, in Bengali, Hindi and Sinhala in accordance with the three hosting countries.["De Ghuma Ke" was the Hindi version composed by the trio of Shankar–Ehsaan–Loy. It incorporates an array of Indian rhythms, as well as elements of rock and hip-hop.

Recently, the Tamilnadu Govt hiked the bus fares, price of milk and electricity.  The common man has to grin and bear – who else will pay for the administrative cost of running the Govt. if it is not the citizens of the Nation ? – one thought !.  Sops, frees and freebies cannot continue to downpour, subsidies cannot keep flowing – some point of time somebody has to pay for it and it is all the individuals and Corproates who earn have to pay the tax.. looks right – but in a system which has over the years build direct and indirect taxes – some easily understood and some complex in their structures, who built in the tax exemptions and why should there be some ? Or is there any control on the exemptions granted from time to time. 

Now the team of : Shashank V Manohar,   President; N. Srinivasan, Hon. Secretary; Sanjay Jagdale, Hon. Joint Secretary; M.P. Pandove, Hon. Treasurer; N Shivlal Yadav, and a host of Vice Presidents would know.  They are the Office bearers of Board of  Control for Cricket [BCCI] in India.  Cricket has a long history and the administration almost equals its length.  The history of the Board suggests that as early in 1721, when  Aurangzeb, the sixth of the great Mughals, had passed away, the mughal empire was to disintegrate,  Marathas were gaining in prominence – the merchants from Europe arrived.  ,The sea-route being the sole link between them and their respective homelands, most of these settlements were situated in the coastal areas of the Indian peninsula.  Those who came by the British ship and dropped anchor in the coastal India had some recreational activities and cricket was one of their pastimes.   Going by the web of BCCI, the  British army took on the English settlers in what was the first recorded cricket match in India in 1751.  The establishment of the Calcutta Cricket Club (what we know today as CC & FC) in 1792, was another watershed for the sport in the land. In fact, it is the second-oldest cricket club in the world, after the MCC (1787).

Over the years Cricket has gained immense popularity need not be stated at all.  Now there are reports that  India's Parliamentary Standing Committee on Finance has called the tax exemption of Rs 45 crore (approximately US$8.67 million) granted to the ICC for the 2011 World Cup "unjustified and devoid of merit", and recommended that the Department of Revenue review the exemption.  The tax exemption reportedly was to International Cricket Council (ICC) on the revenue generated from the WC 2011  -  the World Cup received huge sponsorships and was patronised by the corporate sector in a big way.

The authorities had granted exemption using discretionary powers under the provisions of general exemption for international sporting events.  For quite sometime now, there have been allegations on the running of cricket administration, especially the IPL extravaganza.  The committee was also scathing in its criticism of the Income Tax Department, saying it had been inconsistent in taxing the BCCI and called for a probe of the department. "The inordinate delay and gross inaction in finalising assessment cannot but reinforce the Committee's desire seeking a thorough probe into the whole gamut of this issue, bringing out clearly the culpability of the tax officials concerned with granting exemptions and finalising assessments in this case." There are further reports that  board has already been sent 19 show-cause notices over foreign exchange violations involving amounts totalling approximately Rs 1077.43 crore, and been asked to pay Income Tax aggregating Rs 375.16 crore. Service tax show-cause notices totalling Rs. 159.12 crore have also been sent to a number of stakeholders and service providers of the IPL.  The BCCI's alleged violations of the FEMA regulations are believed to have occurred when the BCCI moved the Twenty20 tournament to South Africa in 2009 amid security concerns caused by the holding of India's national elections at the same time as the IPL.

Why should there be tax exemptions to a body which is earning crores ?  As you should know, BCCI is not the Govt body or does not represent the Nation.  It is the governing body for cricket in India.  BCCI is a society, registered under the Tamil Nadu Societies Registration Act which uses government-owned stadiums across the country at a nominal annual rent.  BCCI are not required to make their balance sheets public.

With regards
S. Sampathkumar.

1 comment:

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