In a historic announcement, the Board of Control for Cricket in India (BCCI) confirmed the sale of media rights for the Indian Premier League (IPL) for a staggering amount of Rs 48,390 crore. This five-year deal has elevated the IPL to become the second most valued sporting league in the world, a remarkable feat for Indian cricket.

BCCI Secretary, Jay Shah, expressed his excitement and described it as a red-letter day for Indian cricket. He emphasized that the IPL has been synonymous with growth since its inception and the latest e-auction has propelled the brand to new heights. The per-match value of the IPL has now surpassed other renowned sporting leagues worldwide.

Disney Star emerged as the winner of the Indian sub-continent TV rights by retaining them for a remarkable sum of Rs 23,575 crore, equivalent to Rs 57.5 crore per game. Viacom18, backed by Reliance, secured the highly sought-after India digital rights deal for an astounding Rs 20,500 crore. Viacom18 also won the non-exclusive Package C, paying an additional Rs 2991 crore.

The media rights deal covers a total of 410 matches over five years, with each year featuring a varying number of matches. The 2023 and 2024 editions will consist of 74 matches each, while 2025 and 2026 will have 84 matches per season. The 2027 edition is slated to have 94 matches. Viacom18 and Times Internet acquired Package D, which includes overseas TV and digital rights, for a sum of Rs 1324 crore.

Viacom18 entered the bidding process through a consortium that includes former Star India head Uday Shankar (Bodhi Tree) and James Murdoch (Lupa Systems), adding further prominence to the deal.

BCCI Secretary Jay Shah expressed his satisfaction with the outcomes, highlighting the organizational capabilities of the BCCI despite the challenges posed by the pandemic. He also acknowledged the transformative impact of the digital landscape on cricket, stating that it has changed the way the game is watched and contributed to its growth.

Shah further revealed that the revenue generated from the IPL will be utilized to strengthen the domestic cricket structure in India. This includes initiatives to support grassroots cricket, enhance infrastructure, and improve facilities across the country, ultimately enriching the overall cricket-watching experience.

In terms of valuation, the IPL now stands among the top sporting properties globally, competing with prestigious leagues such as the National Football League (NFL), National Basketball Association (NBA), and English Premier League (EPL).

The per-match value of the IPL has witnessed a substantial increase, rising from Rs 54.5 crore to over Rs 114 crore, marking a more than 100% surge. Globally, the IPL stands second in terms of per-match value (USD 14.61 million), following the NFL, where each match is worth USD 17 million.

The Walt Disney Company, commenting on the IPL rights auction, stated their intention to explore other multi-platform cricket rights, including future rights for the International Cricket Council (ICC) and the BCCI, which they currently hold until the 2023 and 2024 seasons, respectively. They also highlighted their ownership of the Pro Kabaddi League rights, Indian Super League football rights, as well as various international sports rights such as the Wimbledon Championships and the English Premier League.

IPL media rights auction pointers:

• The auction was conducted in two phases. In the first phase, bids were invited for package A, which included exclusive TV rights for the Indian subcontinent. In the second phase, bids were invited for package B, which included the non-exclusive digital rights for the Indian sub-continent, and package C, which included the non-exclusive rights for the overseas market.
• Disney Star was the highest bidder for Package A, while Viacom18 was the highest bidder for Package B and Package C.
• The total value of the deal is Rs 48,390 crore, which is an increase of over 100% from the previous deal, which was worth Rs 23,575 crore.
• The deal is a major boost for the BCCI, which will use the revenue to strengthen its domestic cricket structure, boost infrastructure and spruce up facilities across India, and enrich the overall cricket-watching experience.
• The high value of the IPL media rights is a testament to the growing popularity of the tournament. The IPL is now one of the most popular sporting events in the world, with a global television audience of over 500 million people. The tournament is also a major economic driver, generating billions of dollars in revenue each year.
• The success of the IPL is a major positive for Indian cricket. The tournament has helped to popularize the game across the country and has also helped to raise the profile of Indian cricketers around the world. The IPL is now a major global sporting event and is sure to continue to grow in popularity in the years to come.

Why the BCCI does not have to pay any Tax on Multi-Crore IPL income

Prepare to be shocked and bewildered by the revelation surrounding the taxation of the multi-crore Indian Premier League (IPL) by its founding body, the Board of Control for Cricket in India (BCCI). Despite the enormous amounts of money involved in the league, from high-stakes auctions to lucrative sponsorships, it might come as a surprise that the IPL itself is not subject to taxes.

In a decision that left many in disbelief, the Income Tax Appellate Tribunal (ITAT) upheld the BCCI's argument that the income generated through the IPL should be exempt from taxation. The tribunal, in a November 2, 2021 order, agreed that the BCCI's primary objective of promoting cricket remained intact despite the financial gains from the IPL. Consequently, as long as the IPL profits are utilized for promoting cricket, the BCCI is entitled to claim tax exemption.

This revelation adds a shocking twist to the story. While the IPL, as an entity, avoids paying taxes, players participating in the league are subject to income tax on their earnings.

The BCCI had taken the matter to the Mumbai bench of the Income Tax Appellate Tribunal after receiving three show-cause notices from the revenue department in 2016-17, questioning the tax exemption enjoyed by the BCCI under Section 12A of the Income Tax Act. However, the tribunal rejected the contentions of the revenue department. The bench, comprising judicial member Ravish Sood and vice president Pramod Kumar, argued that the popular nature of the tournament and its ability to attract sponsorships and resources did not alter the fundamental character of the BCCI's cricket promotion activities.

The implications of this decision are staggering, considering the immense financial scale of the IPL and its influence on the cricketing landscape in India. The BCCI's tax-exempt status for the IPL raises eyebrows and fuels debates about the fairness of the tax system and the treatment of sporting events in the country.

The Board of Control for Cricket in India (BCCI) is not liable to pay tax in India. This is because the BCCI is registered as a charitable organization under Section 12A of the Income Tax Act, 1961. This section provides for exemption from tax for income that is "received by a trust or institution wholly for charitable purposes".

The BCCI has been able to successfully argue that its income from the Indian Premier League (IPL) is used for charitable purposes. The IPL is a cricket tournament that is played in India every year. It is one of the most popular sporting events in the world and generates a lot of revenue. The BCCI uses this revenue to promote cricket in India and around the world. It also uses it to provide financial assistance to cricketers and cricket associations.

In 2016, the Income Tax Department issued a show-cause notice to the BCCI, asking it to explain why its income from the IPL should not be taxed. The BCCI challenged the show-cause notice in the Income Tax Appellate Tribunal (ITAT). In 2021, the ITAT upheld the BCCI's argument and ruled that its income from the IPL is not liable to tax.

The ITAT's decision was based on the following factors:

• The BCCI is a registered charitable organization.
• The IPL is a cricket tournament that is played in India every year.
• The IPL is one of the most popular sporting events in the world and generates a lot of revenue.
• The BCCI uses the revenue from the IPL to promote cricket in India and around the world.
• The BCCI also uses the revenue from the IPL to provide financial assistance to cricketers and cricket associations.

The ITAT's decision is a significant victory for the BCCI. It means that the BCCI will not have to pay tax on its income from the IPL. This will allow the BCCI to continue to promote cricket in India and around the world.

Pointers: 

1. Non-profit Status: The BCCI is registered as a society under the Tamil Nadu Societies Registration Act, 1975. As a society, it is considered a not-for-profit organization, primarily engaged in promoting and governing the sport of cricket in India. Non-profit organizations are generally exempt from income tax under Section 11 of the Income Tax Act.

2. Promoting Amateur Sport: The BCCI's primary objective is to promote and develop cricket in India at various levels, including grassroots, domestic, and international cricket. Promoting amateur sports is considered a charitable purpose under Section 2(15) of the Income Tax Act. Therefore, the BCCI falls within the purview of charitable organizations and is eligible for tax exemptions.

3. Income Applied for Charitable Purposes: The income earned by the BCCI, including revenue from IPL, is required to be utilized for promoting cricket-related activities, development of infrastructure, training of players, conducting tournaments, and other charitable purposes related to the sport. As long as the income is applied for these specified purposes, it is exempt from income tax under Section 11 and Section 12AA of the Income Tax Act.

4. Recognition as National Sports Federation: The BCCI has been recognized as the national governing body for cricket in India by the Ministry of Youth Affairs and Sports. National Sports Federations are accorded certain privileges and exemptions, including tax benefits, to promote and develop sports in the country.

It is important to note that while the BCCI itself is exempt from income tax, the players, franchises, and other entities involved in the IPL may be liable to pay taxes on their respective incomes as per the provisions of the Income Tax Act. It is also worth mentioning that the tax treatment of sporting events and organizations may vary from country to country, depending on the specific laws and regulations in each jurisdiction.

References:

• "ITAT Upholds Tax Exemption For BCCI For Income From IPL" - Live Law
• "IPL Is Not Liable To Pay Tax, BCCI's Objective Of Promoting Cricket Remains Intact: ITAT" - Economic Times