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Service Tax Liability on Cricketers

CA RITUL PATWA 
on 02 September 2013

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The central government has introduced the concept of Negative List w.e.f. 01-07-2012, under which all persons providing any SERVICE which is not covered under the Negative List (Sec. 66 D) or Mega Exemption Notification (Notification No. 25/2012 dated 20-06-2012) shall be liable to pay Service Tax, subject to an exemption of the Threshold Limit of Rs. 10 Lakhs (Notification No. 33/2012 dated 20-06-2013).

Frequently Asked Questions:-

FAQ 1: What is considered as a Service, under the Service Tax?

Ans. 1: Service [As per section 65 B (44)] means any activity carried out by a person for another for a consideration, and includes a declared service.

FAQ 2: Is the services provided by a Player, coach, referee, umpire or a team manager for participation in a sporting event organized by BCCI considered as a Service under the ‘Service Tax’

Ans. 2: YES

FAQ 3: Is this service covered under the Negative List?

Ans. 3: NO

FAQ 4: Is there any relief for sportsman under the Mega Exemption Notification?

Ans. 4: Following exemptions are provided under the Mega Exemption Notification for sportsman:-

PARA 8: Services by way of training or coaching in recreational activities relating to arts, culture or sports;

PARA 10: Services provided to a recognised sports body by-(a)  an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body;(b)another recognised sports body;

FAQ 5 : If a person is a coach or trainer associated with BCCI on contract, will he be covered under PARA 8 of the Mega Exemption Notification?

Ans.5 : NO – The important point of consideration in para 8 is that the coaching/ training should be for recreational purpose and not for any professional development. Whereas the coaches attached with BCCI or affiliated bodies are training professionals and not leisure seekers.

FAQ 6: Whether BCCI is a recognized sports body for coverage under Para 10 of the Mega Exemption Notification?

Ans. 6 : A ‘Recognised Sports Body is defined at S. No.(za) of Para 2 of Mega Exemption Notification. The critical areas for consideration are as below:-

S. No.

Qualification for a Recognised Sport Body

Whether BCCI Qualifies under the Criterion

Remarks

Impact

1.

The Indian Olympic Association

No

- -

2.

Sports Authority of India

No

- -

3.

A National Sports Federation (NSF) recognised by the Ministry of Sports and Youth Affairs of the Central Government, and its affiliate federations

No

BCCI has not been recognised as a National Sports Federation for the year 2013: LIST OF NATIONAL SPORTS FEDERATIONS -

4.

National Sports Promotion organizations recognised by the Ministry of Sports and Youth Affairs of the Central Government

No

- -

5.

The International Olympic Association or a federation  recognised by the International Olympic Association

No

Although ICC is recognised by IOA but this is not applicable on its affiliated associations -

6.

A federation or a body which regulates a sport at international level and its affiliated federations or bodies regulating a sport in India

Yes

ICC is an international federation which regulates cricket and BCCI is its affiliates federation/ body regulating cricket in India. It will cover only BCCI and not its affiliated federations



FAQ 7: Which payment received by a player, referee, coach, umpire and a team manager are covered under the Para 10 of the Mega Exemption Notification?

Ans. 7 : Details of coverage and non-coverage is discussed as below:-

S. No.

Nature of Payment

Coverage under Para 10 of Mega Exemption Notification

A.

Match Fees for participation in any sporting event

Covered

B.

Annual Contract Fees as a team member

Covered

C.

Prize Money for Extraordinary Performance

Not Covered

D.

Annual Share in Profit

Not Covered

E.

Receipts from Endorsements and Advertising Contracts

Not Covered

F.

Receipts as Brand Ambassadors

Not Covered

G.

Receipts for participating in various events like award functions, hotel inauguration etc

Not Covered

FAQ 8 : What was the position prior to 01-07-2012?

Ans. 8:  Prior to 01-07-2012 services listed under para 1 to 4 of the Ans. 7 above were non taxable for all sportsman including BCCI and its affiliated federations. However, Endorsements, Sponsorships, Event Participation fees etc were taxable even before 01-07-2012.

FAQ 9: What is the suggestion for a player associated with BCCI or its affiliated federation – who has not got himself, registered till date and has been receiving taxable revenue from BCCI or its affiliated federations?

Ans. 9:  The player should apply for registration under Service Tax to cover there liability w.e.f. 01-07-2013.In order to save the interest and penalties for delays in registration, payment of taxes and filling of returns upto 31-12-2013 – A declaration should be made under the Service Tax Voluntary Compliance Encouragement Scheme, 2013.


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