The BCCI may end up paying almost 1,000 Cr INR in taxes for hosting the upcoming ICC T20 World Cup, scheduled in October-November if they fail to get exemptions from the government. When the ICC allows its tournaments to its member countries, the two parties sign a host agreement that binds the host to secure full tax exemption.
As per reports, even if the government grants a partial exemption, the board will have to pay at least Rs 227 crore tax, if it wants to host the tournament. The International Cricket Council (ICC) has earmarked the United Arab Emirates (UAE) as a backup venue to host the seventh edition of the tournament, in case the BCCI fails in its endeavors.
The BCCI has already missed a couple of deadlines -- December 31, 2019, and December 31, 2020 -- and now the pressure mounts on it to decide quickly if it wants to host the prestigious tournament. An official said that the new and revised deadline is in February.
The Union Finance Ministry had received BCCI’s application for tax exemption a long back, but haven’t given any response to it yet, despite home minister Amit Shah’s son Jay is the secretary of the BCCI, while Arun Singh Dhumal is the younger brother of Anurag Thakur, Minister of State for Finance and Corporate Affairs.
Given that the BCCI had missed a couple of deadlines, the ICC has seemingly presented it with two options, which may be final.
One is to relocate the United Arab Emirates (UAE), and the other is that it provides an undertaking that if it fails to get the exemption, then it will have to meet the tax liabilities, which could be a minimum of Rs 226.58 crore and a high of Rs 906.33 crore.
At the December 24 AGM, the BCCI office-bearers discussed this issue with the general body, and an official who attended the meeting mentioned that the house looked divided over whether the world's wealthiest cricket board should pay the tax if the government doesn't grant full tax exemption.
"The matter was discussed for 10 to 15 minutes, after which the house authorized the BCCI office-bearers to deal with the issue. But what was evident was that all the office-bearers were not on the same page vis-a-vis the question of whether the BCCI should forego the hosting rights if the government doesn't grant full tax exemption. Some members said it was a matter of prestige -- izzat ka sawal hai -- that India should pay the tax and host the World Cup if it comes to that," the official told IANS.
The issue will also affect India’s chances of hosting the ICC World Cup in 2023 if the government refuses to grant any exemption in taxes.
"So, the question is simple: If the government had not given full tax exemption in 2016, how can it give it for the 2021 World Cup? And if it grants a full exemption for 2021, it will have to, by the same token, give a full exemption for the 2016 tournament retrospectively," said one expert.
The tax issue has arisen because the ICC's media rights holder, STAR India, is based in India and the broadcaster pays ICC the money. If the Indian government doesn't grant tax exemption to STAR India, the premier broadcaster will not pay the entire amount promised to the ICC. This will result in member bodies of ICC receiving less share from the governing body’s distribution.