ICC must pay income tax

The government has erred in granting an income tax exemption to the International Cricket Council (ICC) for the 2011 World Cup, even if the tax rules allow for such a waiver. Sport is not just celebration of human athletic prowess. It is also business, very prosperous business.

There is no reason to exempt sport as business from tax. Cricket has become a money spinner for cash-rich ICC that prides itself as a truly global business organisation. It also earns huge revenues through sponsorship and media rights. And this is not small change.

So, there is simply no reason why ICC should not contribute to the tax kitty. Sure, the cricket body has not violated law as the government has now spared subsidiaries of ICC from paying tax on the income generated from the World Cup here. A precedent was set when the income-tax law was amended in 2006 to grant a tax waiver to the ICC for the Champions Trophy.

The government had then empowered itself to grant such waivers to global sporting bodies organising events in India, but on a case-to-case basis. Such tax exemptions are arbitrary and provide political patronage opportunities. They must be eschewed. The government should scrap the rule and withdraw the power to grant such exemptions.

Similarly, there is no logic in exempting the Indian Premier League (IPL), an arm of the Board of Control for Cricket in India (BCCI), from paying tax on its income. The BCCI has ceased to promote cricket as a 'charitable' activity. It has become a commercial entity with huge revenue streams. Revenue generated from the IPL is shared between the umbrella cricket body and its franchisees. But the taxman does not get a look-in and this is unacceptable.

The BCCI also uses only 10% of the surplus money on promoting cricket and the balance is shared with players. Cricketers pay tax on their income from IPL matches. So do franchisees, but not BCCI. The tax department is, therefore, right in raising a tax demand on BCCI's past income. Sport by itself is huge business and promotes a host of related businesses and entertainment in general. Profits from sport must contribute to the exchequer on par with other businesses.