- Indian Premier League: IPL is earning several thousand crores of rupees every year. Know how much of this income of IPL goes in tax?
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IPL Tax Free:
The Indian Premier League (IPL) earns a lot of money for the BCCI every year. Apart from sponsorship, broadcasting and live streaming rights, there are many other sources of income in Indian Premier League. Recently a figure came out that BCCI has made a profit of more than 5 thousand crores from the 2023 season. This league, which earns several thousand crores, has become one of the richest sports leagues in the world. But have you ever wondered whether the IPL is tax free? Is there no tax on this league?
Is there tax on IPL?
The truth is that BCCI does not have to pay any tax on the thousands of crores of rupees earned from IPL. In 2021, BCCI had demanded in its appeal that even though it is earning a lot of money through IPL, its objective of promoting cricket remains intact, hence this league should be declared tax free. This appeal was upheld by the Income Tax Appellate Tribunal (ITAT).
Therefore, as long as BCCI is using the profits from IPL to promote cricket, Indian Premier League will be tax-free as per law. But as far as the earnings of players from IPL are concerned, tax is levied on it.
Why is there no tax on IPL?
In 2016-2017, the Revenue Department had sent three show cause notices to BCCI. In this notice, BCCI was asked why it should not pay tax on Indian Premier League earnings under Section 12A of the Income Tax Act? In this regard, the Board of Control for Cricket in India had approached the Mumbai bench of ITAT. According to reports at that time, ITAT had rejected the Revenue Department’s application and ruled in favor of BCCI.
The Indian Premier League (IPL) is more than just a cricket tournament—it’s a financial juggernaut that generates massive revenue each year. While fans enjoy the thrilling matches, the Indian government reaps significant financial benefits through various forms of taxation. But how exactly does the IPL contribute to the government’s coffers, and how much does the state earn from this cricketing spectacle? Let’s delve into the financial mechanics behind the IPL and the taxes that turn cricket into a revenue stream for the nation.
Taxation in IPL: A Breakdown
The Indian Premier League, like any major commercial event, is subject to multiple layers of taxation. These taxes are levied on different entities involved in the league, including franchises, players, sponsors, broadcasters, and the Board of Control for Cricket in India (BCCI). Here’s how the taxation system works:
- Goods and Services Tax (GST): The most significant tax levied on the Indian Premier League is the Goods and Services Tax (GST). The GST is applicable to various transactions within the IPL ecosystem, such as ticket sales, broadcasting rights, sponsorship deals, and merchandise.
- Ticket Sales: Ticket sales forIndian Premier League matches attract a GST of 28%, as they fall under the category of entertainment events. This tax is collected from the ticket buyers and is a direct source of revenue for the government.
- Broadcasting Rights: The IPL’s broadcasting rights are one of the biggest revenue generators. The broadcasters pay GST on the amount they bid to secure these rights. In 2017, Star India acquired the broadcasting rights for a whopping ₹16,347.50 crore for five years, leading to substantial tax revenue for the government.
- Sponsorship and Advertising: Sponsorship deals and advertisements, whether on players’ jerseys, in stadiums, or during broadcasts, are also subject to GST. With companies willing to pay top dollar for visibility during IPL, this becomes another significant source of tax income.
- Income Tax:
- Franchises: The franchises that own the Indian Premier League teams are subject to corporate tax on their profits. While some teams have reported losses in the past, the overall profitability of franchises has increased over the years, contributing to the government’s revenue through corporate tax.
- Players: Indian cricketers are taxed according to their income slabs under the Income Tax Act, while foreign players are subject to tax at source (TDS) on their earnings from the Indian Premier League. The earnings include match fees, endorsements, and prize money, all of which are taxable.
- Tax Collected at Source (TCS): The Indian Premier League also involves Tax Collected at Source (TCS) on various transactions, including sponsorship deals and the sale of broadcasting rights. This tax is collected by the seller at the time of the transaction and is deposited with the government.
How Much Does the Government Earn from IPL?
The exact figure of how much the Indian government earns from the Indian Premier League can vary each year depending on the league’s revenue. However, it’s estimated that the government earns several thousand crores annually from the IPL through GST, income tax, and TCS.
For instance, during the 2022 season, the government is believed to have earned over ₹3,500 crore through various taxes related to the IPL. With the league’s popularity and revenue continuing to grow, this figure is likely to increase in the coming years.
Indirect Economic Benefits
Apart from direct taxation, the Indian Premier League also contributes to the economy in other ways. The tournament generates employment, boosts tourism, and promotes spending in the hospitality and entertainment sectors. Cities hosting IPL matches witness increased economic activity, from hotel bookings to local transportation and retail spending.
Conclusion
The Indian Premier League is not just a cricketing spectacle; it’s a massive financial event that significantly contributes to the Indian economy. The various taxes levied on Indian Premier League-related activities—GST, income tax, and TCS—bring in thousands of crores to the government’s treasury every year. This revenue supports public spending and contributes to the nation’s economic growth.
As the Indian Premier League continues to expand its reach and revenue, the Indian government’s earnings from the league are set to grow, making it a crucial financial contributor to the nation’s economy. So, while fans celebrate their favorite teams and players, the government celebrates a windfall from one of the world’s most lucrative sports leagues.