CHENNAI: With the government recommending a hike in GST from 28 per cent to 40 per cent to watch IPL matches during the 56th meeting of the Goods and Services Tax Council on Wednesday, fans will be forced to shell out more for tickets from next season. What seems interesting is that IPL is categorised under luxury goods and attracts the same GST as casinos or tobacco.
According to a Ministry of Finance release, "Admission to casinos, race clubs, any place having casinos or race clubs or sporting events like IPL will have GST of 40 percent with ITC (Input Tax Credit)."
The GST Council's recommendation has not only left the fans worried but also the franchises, who set ticket prices for IPL matches with the parent body, BCCI, having no role in it. It might be too early for these franchises to come out in the open and express their opinion but the change in slab has certainly swung them into action and made them to plan their next move. "It's too early to comment on the issue. We'll discuss it internally before finalising the future course of action," sources from two franchises told this daily.
The most affected will be Tamil Nadu where entertainment tax is levied at 25 per cent on the base ticket price and if added with the revised GST rate, the hike would be 65 per cent which the fans have to pay to watch the IPL matches at the MA Chidambaram Stadium in Chennai. This has put the franchise in a piquant position and might be forced to approach the state government to discuss about the entertainment tax. A franchise official said as much and added "it's too early to talk about the revised GST as we have yet not studied it."
The Indian cricket board, which owns the IPL, did not comment on the development by the time this report was filed but in all likelihood the team owners are expected to approach it and share their concerns.
Meanwhile, Supreme Court lawyer Virag Gupta said the basis of classification appears to be unclear in the recommendation made by the GST Council. The lawyer, who is an expert on cyber and indirect tax law, spoke about a different issue. "The IPL is not defined in detail and thus the basis of classification appears to be unclear and prima facie arbitrary. Interestingly, ticket sales are the smallest source of revenue for the IPL, so it may not have a big implication. It appears advertisement revenue in all sporting events including BCCI and IPL may attract uniform GST rates," Gupta told this daily.
As per the recommendations, international matches of the Indian cricket team have been classified under other sporting events and would invite a lesser GST of 18 per cent on tickets priced above Rs 500. Any tickets priced below Rs 500 will be exempted from GST.
"Tickets for sporting events like the IPL will be taxed at 40%, which is the highest tax under the GST regime and is at par with luxury goods. However, other sporting events, including events of the BCCI, will be taxed at 18% if ticket price is more than Rs. 500. Questions may also be raised as to how the BCCI is classified as a government sports body when it is not controlled by the government and does not fall within the purview of the Right to Information (RTI). However, these are only recommendations of the GST Council and a final notification on this subject with explanatory notes are yet to be issued," he opined.
The new tax slab where the IPL has been bracketed with casinos, however, is going to have far-reaching effects as other sporting leagues may also come under its purview depending on interpretation by the department concerned.