Indian Premier League Controversy about Tax Exemption

The Indian Premier League has been highly successful for the owners, sponsors and the public alike. But among the success and money lies a shadow of controversy which has been expanding over the IPL universe at a steady pace. One such controversy emerged in 2011 shortly after the world cup. The government had given tax exemptions to the ICC after the world cup from the gross revenue. These tax exemptions amounted to a total of 45Crore in Indian Rupees. In connection, Shiv Sena leader Subhash Desai filed a PIL to recover entertainment tax from the Indian Premier League. By means of the PIL he urged the government of Maharashtra to look into the matter regarding tax exemption and also recover the same from the Indian Premier League.

The basic assumption for the same was that the Indian Premier League matches were for the sole purpose of entertainment and the Income tax department had the responsibility to impose entertainment tax for the same. It was pointed out in another independent PIL by Sakhthi Vasan that the tickets sold for the IPL matches were sold at exorbitant rates and it was highly unjustified that they not be charged entertainment tax.

Soon the matter of tax exemption was probed into and many courts found the matter rather disturbing. The Mumbai court was amongst the first to show its disappointment and immediately asked the BCCI and IPL to furnish all the income generated by the franchise. This matter escalated when the Madras High Court rejected any tax exemptions on the IPL franchise. It observed that the ticket prices for the matches ranged between 25,000 to 40,000 Rupees and with such high stakes tax exemption was impossible. The Bombay High Court decided to find the parties responsible for this gross mishap and held Union Agriculture Minister Sharad Pawar as respondent for the same.

It was later added that entertainment tax would be regularly charged from the franchise in all forthcoming seasons as the gross ticket pricing and the representation of the franchise clearly depicted entertainment as one of its primary focuses. Huge taxes were imposed on the BCCI which shot up to 566Crores in rupees and also paved way for clearing any tax frauds in the franchise.

The Indian Premier League has been a huge success and at the same time a hub of controversies. It started with the suspension of Lalit Modi and went on to tax exemption fraud. This further escalated to attacks on celebrities like Shahrukh Khan and also claims of sexual harassment by the cheerleaders. As stated earlier, in a franchise so dominating and powerful, one can always expect damages.

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