A recent discussion gained traction on social media platforms concerning the significant tax burden on Indian Premier League (IPL) tickets. It was pointed out that fans attending the Chennai Super Kings (CSK) vs Royal Challengers Bengaluru (RCB) match in Chennai effectively paid taxes amounting to over 70 per cent of the ticket’s base price. This observation has led to wider commentary on the taxation structure surrounding such entertainment events in India.
The Chennai Match Ticket: A Case Study
The focus of the discussion was a specific ticket for the aforementioned match held at Chennai’s MA Chidambaram Stadium.
> Seat Location: J Lower Stand
> Final Price Paid: ₹ 4,000
> Base Price: ₹ 2,343.75
The difference between the base price and the final amount paid was attributed to several taxes levied on the ticket.
Breakdown of Taxes Levied
The significant tax component on the ₹ 4,000 ticket was highlighted. The levies included:
> Entertainment Tax: 25% (Levied by the state/local body)
> Central Goods and Services Tax (CGST): 14%
> State Goods and Services Tax (SGST): 14%
Calculation revealed that the total tax amount represented more than 70% of the original base price (₹ 2,343.75), bringing the final cost to ₹ 4,000. This structure was described by some commentators as a “joke to the taxpayers”.
Contrast: BCCI’s Tax Status
An interesting counterpoint was raised regarding the Board of Control for Cricket in India (BCCI).
> Tax Liability: The BCCI reportedly pays zero per cent tax on its earnings from the IPL.
> Reason: It is registered as a “charitable organization” under Section 12A of India’s Income Tax Act.
> Justification: This status is granted on the grounds that the BCCI’s activities involve the promotion of cricket, considered a non-profit pursuit.
> Legal Backing: This position was upheld by the Income Tax Appellate Tribunal (ITAT) in 2021. The tribunal noted that structuring a tournament to be popular and generate resources does not negate the fundamental character of promoting cricket.
Public Reaction: The ‘Tax-on-Tax’ Phenomenon
The high tax rate provoked strong reactions online. The term “tax-on-tax” was frequently used to describe the situation. It was noted that the 25% Entertainment Tax has been applicable in Tamil Nadu for many years. Some comments framed the high prices of tickets as a consequence of policy loopholes, suggesting fans were funding more than just the match itself.
Understanding the Tax Structure
Further clarification on the tax application was provided through online discussions:
> Entertainment Tax Persistence: While Goods and Services Tax (GST) subsumed many taxes, Entertainment Tax levied by local bodies was not fully subsumed. States like Tamil Nadu retain the power to impose this tax separately.
> GST on Entertainment Tax: As per Section 15(2)(a) of the CGST Act, 2017, the value of supply (on which GST is calculated) includes taxes, duties, cesses, etc., levied under other laws if charged separately. This means GST (CGST and SGST) is calculated on the total value including the Entertainment Tax, leading to the “tax-on-tax” effect observed.
> Luxury Argument: A perspective was shared suggesting that IPL tickets are considered a luxury item, thus justifying a higher tax rate imposed by the government (specifically, the state government via Entertainment Tax). The Central government’s share comes only from the CGST component.
This complex interplay of state-level Entertainment Tax and central/state GST explains the high final price faced by cricket fans for IPL tickets in certain locations like Chennai. (FE)