The Indian Premier League (IPL) symbolises mega popularity and big money for all stakeholders namely BCCI (Board of Control for Cricket in India), franchise companies, IPL players, media houses, etc. In the last decade it has caught the national imagination as few other games have. The objective is to provide entertainment to cricket lovers, profits for franchise owners and promote cricketing talent.
However, there is a catch. IPL profits are not taxed! Here is why. But first we need to know what type of legal entity the BCCI is—a section 8 company or a society?
At the outset, we must state that the purpose of this article is to provoke thought and not cast aspersions on any organisation or individual.
It is not a Section 8 company. This 2022
Business Standard report states that “A company is registered as a non-profit organisation (NPO) under the section 8 to promote education, charity, religion, arts, commerce, environment, sports, science, research, social welfare. And the profit earned by the organisation cannot be used for paying out dividends to its members. It can only be used to promote the purpose it has been set up for. The licence for such companies is issued by the Central government. While the authorisation for the trust is given by state governments. And these companies can get the tax benefits if it gets registration under section 80G and 12AA of the IT Act.” For
FAQ on Section 8 companies Institute of Company Secretaries of India (ICSI).
So, Is BCCI a Society?
Yes. It is a society registered under the Tamil Nadu Societies Registration Act, 1975. A Society is not entitled to distribute profits to its members.
What Are Its Objectives?
To develop and promote cricket.
Are Its Profits Tax Exempt?
Yes. The annual report for the year ended 31 March 2024 refers to Sections 11, 12A and 2 (15) of the Income-Tax Act 1961.
Section 11 – “Subject to provisions of sec 60 to 63, the following income shall not be included in the total - Income derived from property held under trust wholly for charitable or religious purposes, to the extent such income is applied for charitable or religious purposes in India; to the extent to which the income so accumulated or set apart is not in excess of fifteen percent of the income from such property.”
Section 12A has conditions for applicability of section 11 and 12. “The provisions of section 11 and 12 shall not apply in relation to income of any trust or institution unless an application for registration of the trust or institution in the prescribed form and in the prescribed manner.”
The definition of ‘Charitable Purpose’ Section 2(15) is given at the end of this article.
Since the objective is to develop and promote cricket, its profits are said to be exempt under the Income-tax Act 1961. The BCCI March 2024 annual report is full of references to this tax exemption matter being before statutory authorities for numerous earlier years.
The deeper intent of this article is to explore if IPL is a business and should be taxed as such.
There is no doubt that IPL has led to the discovery of new talent in India and thus developed and promoted cricket. The fees paid to players, hype around matches and marketing have successfully created a buzz around IPL.
First, an overview of BCCI financials of which IPL is a part. To do so, I downloaded BCCI’s annual report for the year ending (y.e.) March 2024. It includes the audit report and audited accounts. Plus, I read up numerous media reports whose links are at the end of this article.
IPL started with eight teams; the number is now ten. Earlier, every team paid an entry fee of approximately US$90.4mn (million) or about Rs350 crore at the exchange rate then. Recently, the Torrent group bought a 67% stake in Gujarat Titans from CVC Capital Partners, at a reported valuation of Rs7,500 crore.
Surely, the fees/ valuation for earlier and new entrants cannot be compared. A team is allowed to hire players, etc and compete for which there are known revenue streams.
The BCCI too has revenue streams, some of which are shared with franchises.
Source of Income and Expense Heads-March 2024 Annual Report Pg 89. Refer to Table 5 below for audited numbers for the y.e. 31 March 2024.
Besides the above, there are certain economic spin offs of IPL, in terms of government revenue and positive impact on economy.
Are these benefits strong enough reason for tax exempt BCCI profits from IPL? Now some key IPL numbers from BCCI’s audited accounts.
During the financial years 2022-23 and 2023-24, the gross GST revenue collection from BCCI amounted to Rs2038.55 crore.
Source GST department must check if GST charged on player’s income is for the whole amount of fees paid or is there some structuring involved?
The above tables indicate that IPL is a well-run business with well-defined revenue streams and expenses. Yes, IPL is promoting cricket by spotting new talent and making the game more popular but that does not take away from the fact that it is a business for the franchise owners and a big revenue stream for the BCCI.
None is questioning BCCI’s tax exemption from cricket where two nations compete in various formats. Here private teams compete, to win prize money.
Just because IPL promotes cricket, and there are GST/TDS revenues, can that be enough reason to justify tax exemption to IPL?
If BCCI profits from IPL are tax-exempt so must the franchise companies because it is they who are spotting and nurturing talent which is not the case. The organiser, i.e,. BCCI, is tax exempt but the franchises who actually spot talent pay income-tax!
Remember that BCCI is no ordinary sports federation. Its cash and bank balances and interest on bank deposits (fixed and savings accounts) might be the envy of most corporates. Some key numbers.
@ Provision made on a prudent basis inspite of ITAT order in BCCI’s favour. Pg 4 of Annual Report. # Income and Expenditure shows net surplus, report has details.
According to a
PWC paper dated 23 April 2012, BCCI amended its objects during 2006 and 2007 to include to permit direct and indirect commercial interest in IPL and 20:20. While the income tax tribunal and courts will assess the matter, we are now in 2025 and have seen what IPL has become so whatever may be the legalities, the Centre must ensure BCCI profits from IPL are taxed.
Those who have doubts of taxing IPL profits should read section 2 (15) of the Income-Tax Act 1961 which defines Charitable Purpose as ‘The expression “charitable purpose” includes (a) relief of the poor, (b) education, (c) yoga, (d) medical relief, (e) preservation of environment (including watersheds, forests and wildlife) (f) preservation of monuments or places or objects of artistic or historic interest and (g) advancement of any other object of general public utility.
Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the
nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration.”
To read full section
The government of India should ask itself if IPL is indeed being organised for a charitable purpose. But it is easy to tax the middle-class! If the middle-class is asked to fulfil its responsibility and pay taxes, so must BCCI!
In conclusion, should BCCI’s IPL business be spun off into a private company and charged income-tax as applicable?
Tax revenue could be dedicated to building missiles, air defence systems and aircraft engines—so important post Operation Sindoor.
I have taken extreme care while culling out data. Errors, if any, are unintentional and without malafide intent.
To readers, I say read, reflect and decide. Can a developing country like India afford to make IPL profits tax-free? The Central government must review and decide.
(Author is a senior chartered accountant, independent columnist and founder www.esamskriti.com)
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