Indian cricketers may have to share goodies with taxmanApril 10th, 2011 - 1:52 pm ICT by IANS
New Delhi, April 10 (IANS) They are being showered with rewards, titles and honorary doctorates after bringing cheer to 1.2 billion Indians by winning the World Cup after a 28-year gap, but the star cricketers will not find the taxman equally benevolent.
Tax experts believe although some portion of the largesse doled out to Team India could be tax-free, a whole lot of other goodies like cars or land, and in many cases even cash awards by various organisations and state governments, will come under the tax bracket.
Let’s take the case of captain M.S. Dhoni.
The Board of Control for Cricket in India (BCCI) has announced a Rs. 1 crore bonus, the Delhi government Rs. 2 crore, Punjab Rs.1 crore, Uttarakhand a house in Mussourie and land for a cricket academy and the railways says he can travel AC-I Class free for life.
“Provisions are there to exempt any payment, in cash or in kind, made by the central or state governments if approved by the central government in the public interest,” says Rohit Bansal, chief executive, India Strategy Group, with Hammurabi and Solomon Consulting.
“Under Section 10, Clause 17(A) of the Income Tax Act, even state governments have to apply to the central government for tax waivers on awards. The BCCI can also lobby for an exemption for cash awards that it gives away by citing the exemption clause,” he said.
“But being neither a central government nor state government institution, justifying an exemption to the BCCI for its rewards is legally shaky. But other rewards like cars and real estate for personal use will attract tax at a flat 30 percent,” Bansal told IANS.
“For Dhoni, tax will have to be paid from his liquid, taxable income. Simply put, don’t be too surprised if after some time, this ace cricketer requests some `Pontiac donors’ to give him a brake!”
In fact, the debate generated by the award of a Ferrari after Sachin Tendulkar equalled Don Bradman’s 29 Test tons and the subsequent import duty waiver of a whopping $230,000 to get that Modena 360 into India lingered on for nearly a year.
Since Tendulkar was endorsing Palio, manufactured by Fiat, which owns the Ferrari brand, the customs waiver was challenged, as the gift of the iconic car was seen as “earnings” for Tendulkar. The matter was settled after the customs duty was paid by the car-maker.
So Yuvraj Singh and Tendulkar may have to shell out taxes for their premier cars, Hyundai Verna. Singh has also bagged an Audi, which, too, could increase his tax outgo.
“What the tax section says is: Every time there is something like this, there has to be a notification exempting the awards, be it in cash or kind. I am sure they will because winning the world cup is a big thing,” said Parizad Sirwalla of KPMG.
“But any reward by private parties will be taxable. So, if you take the example of Yuvraj being given an Audi, it will be taxed at full individual tax rates,” Sirwalla, executive director, with the accounting and financial consultancy firm, added.
Then there are endorsement deals, which many of the stars of the tournament like Yuvraj are being flooded with. His annual fee, according to industry sources, has risen to Rs.6 crore after the world cup, from Rs.4.5 crore earlier.
With all this moolah being raked in, some of the players could well find themselves in another top-ranking list that was earlier the preserve of actors: Becoming the highest individual tax payers.
(James Jose can be contacted at firstname.lastname@example.org and email@example.com)
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- Dhoni gets Rs.2 crore, Delhi players Rs.1 crore each (Lead) - Apr 03, 2011
- Haryana doubles cash rewards for Rio - Aug 26, 2012
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- BCCI cash prizes for U-19 winners - Aug 26, 2012
- World Cup-winning cricketers' cash prize upped to Rs.2 crore - Apr 27, 2011
- ED investigating money laundering in IPL, says Pranab - May 21, 2012
- Yuvraj Singh gifted Audi Q5 for his stellar World Cup show - Apr 14, 2011
- Tendulkar to receive Polly Umrigar Award - May 14, 2011
- Service tax rate raised by two percent (Lead) - Mar 16, 2012
- Arjuna Award will be a great honour, says Yuvraj - Jul 07, 2012
- Cricket World Cup gets Rs.45 crore tax relief - Mar 31, 2011
- Bharat Ratna for Sachin, recommends Maharashtra assembly - Apr 05, 2011
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