The government earned Rs91 crore from the first edition of Indian Premier League cricket tournament through tax deducted at source on payments made to players, umpires, coaches and commentators among others. However, a sizeable part of this is yet to be recovered.
The initial TDS amount received by the income tax department was relatively low, but the Central Board of Direct Taxes issued notices to the BCCI last year reminding it that many of its franchisees had not collected TDS uniformly. In some cases, the tax deducted from the payments made to players was low as two per cent, as against the 10 per cent required by the CBDT.
The Times of India quoted sources as saying that the I-T department had received around Rs 65 crore till the first six months of the current fiscal, based on payouts amounting to Rs 670 crore. The discrepancies were mostly in the case of Indian players, while the foreign players paid TDS in full. Two per cent is the tax deducted in normal contract payments.
In August, a CBDT notification had clarified that all sportspersons, Indian or foreign, besides coaches, trainers, umpires, referees, team physicians, physiotherapists, event managers, commentators, anchors and columnists were in the professional bracket - the same as those rendering technical services – and were liable for TDS at the rate of 10 per cent.
The IPL has attracted the attention of other tax departments too, with the Commissionerate of Service Tax, Delhi, asking the organisers and partners to pay service tax on the sponsorship amount. Though sporting events are normally exempt from service tax, the IPL attracted the levy because of its highly commercial nature.