FEATURES
Follow UsThe Board of Control for Cricket in India (BCCI) is one of the richest business conglomerates in the country, with operational revenue running into billions of dollars per year. From media rights to franchise loyalty fees and sponsorship revenues, multiple revenue streams generate millions of dollars in profits.
To put it into perspective, the BCCI secured ₹48,390 crores for a five-year period after the record-breaking IPL media auction bidding last year, marking a threefold increase compared to the previous cycle. This added almost ₹9,200 crores to the base fee every year, with the BCCI sharing 50% with the franchises and retaining the remaining amount.
Additionally, the sale of two new teams (Gujarat Titans and Lucknow Super Giants) in 2021 earned them ₹13,000 crores for a ten-year period, equivalent to over ₹1,300 crores per year, resulting in significant profits for the BCCI from the IPL. This is without accounting for sponsorship revenues, shares from the ICC revenue pool, and bilateral TV rights, which collectively amount to nearly half a billion dollars (~4000 crores) annually.
Given these revenues, one can expect that the BCCI would be paying a hefty tax, contributing significantly to the Central Government's Taxation pool. Except, that’s not true.
In India's economic structure, middle-class citizens bear the brunt of maximum taxes due to the salaried nature of their jobs, while corporates and businessmen often exploit tax laws by utilizing carry-forward risks. Business income falls under the Capital Gains Tax system, which is significantly lower than the tax rates for salaried individuals.
Remarkably, the BCCI don’t fall under the purview of Corporate Tax either. They do not pay any taxes on their income because, as it stands, they are not liable for it. This has been the case for a significant period.
But how did the BCCI come to enjoy such a status? Let's delve into the story.
The BCCI was established in December 1928 as a society registered under the Tamil Nadu Societies Registration Act, serving as a private consortium of various cricket associations. This granted them immunity from being classified as a National Sports Federation (NSF), which would have subjected them to government oversight and the Right to Information (RTI) Act, like other sporting federations in the country.
They’ve positioned themselves as a charitable organization, devoid of profits for any particular promoter and with no shares available for acquisition. Although functioning like a regular sports body, the BCCI do not rely on government funding and operate independently.
However, the revenue department of India expressed dissatisfaction with this arrangement and challenged the clause in 2016, citing the BCCI's enormous profits from the IPL. In response, the BCCI approached the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) to contest three show-cause notices, explaining why their tax exemption should not be revoked. They emphasized that all revenue goes towards the development of cricket and that the IPL's financial success does not change their commitment to promoting the sport.
If you look further, another Court ruling in 2019 questioned such a clause. In the case of Director of Income Tax (E) vs Gujarat Cricket Association (Tax Appeal No. 268 of 2012) on September 27, 2019, the court commented, "...undoubtedly the activities of BCCI are commercial in nature." That could have been damaging to BCCI, but in November 2021, the Income Tax Appellate Tribunal (ITAT) found logic in the sports body's arguments, stating that the objective of promoting cricket remains intact, further adding some calming undertone.
Take the Football Association of Britain’s case as an example. They, like BCCI, operate as a non-profit corporation, but in the fiscal year of 2021-22, they disbursed approximately 20 million GBP in taxes. Additionally, a provision of 4.8 million GBP has been allocated for deferred tax, representing a future tax liability.
One might ponder whether the Board of Control for Cricket in India (BCCI), with its substantial revenue surpassing the donations received by UNICEF, should be subjected to corporate provisions. While the BCCI undoubtedly contributes to the promotion of cricket, its commercial orientation ensures that tax payments, albeit adjusted, can ultimately serve the nation's welfare.
It is a question that has been diverted for far too long now. There has been dilly-dallying but the needle has hardly moved. It’s time for some due diligence.
