😲 Why is BCCI a Charitable Trust?

BCCI mints a lot of money via IPL. Yet, it's a Charitable Trust. Here's why.

Year 2008. The first-ever IPL series was hosted in India. Little did they know that this one tournament was going to be a fortune turner for the BCCI. 

Yes, IPL became the big Indian festival that no one could stop gushing about. With that, the already rich BCCI became one of the richest sports bodies in the world!

And you know what money does? It attracts taxmen. Wherever there is money, they will want their cut.

And so began the long battle between the BCCI and the Income Tax Authorities. 

First things first. How Does BCCI Operate?

The Board of Control for Cricket in India was formed in 1928. Yes, even before India got its independence. The board was created so the Indian cricket team would get recognized by the International Cricket Council. It works under the Central Government's jurisdiction. But it is a private entity that basically controls every aspect of cricket in India.

Interestingly, since 1996, BCCI has also been granted registration as a charitable trust. But what charity does the BCCI perform?

Promotion and advancement of cricket in the country. Of course.  

However, when the IPL was introduced in 2008, this became a point of contention. 

On recommendation from Justice Lodha Committee and approval from Supreme Court, BCCI made changes in its charter. Memorandum of Association or the charter of a company decides its purpose of existence. BCCI had now changed it to include IPL and other commercial activities.

The Income Tax department saw that IPL matches were earning a ton of money for the BCCI. And so, it shouldn’t be a charitable trust, no?

From 2008 to 2018, the BCCI paid over Rs. 3,500 crores as taxes to the Income Tax department. But the board obviously wasn't happy doing so. 

And it became unhappier when it was denied fresh registration as a charitable trust in 2018. But the Income Tax department said since it was now conducting business for profit (IPL matches), it could no longer be called a charitable trust. Also, didn’t the BCCI itself change its charter? 

Now the BCCI wasn’t going to sit quietly and accept this argument. It appealed to the Income Tax Appellate Tribunal saying that IPL matches shouldn't be counted as a commercial activity. They might be raking in huge profits. So what? They are organized to promote cricket. They are using the funds generated to promote cricket.

The Income Tax Appellate Tribunal has agreed to this line of reasoning. Plus, BCCI’s profitability is calculated on a yearly basis. Whenever the receipts exceed the threshold for a charitable trust, BCCI has to pay up taxes for those years. This is something that has to be done every year. But that doesn’t take away their right of being called a charitable trust.

So it has allowed the BCCI to remain a charitable entity.  

But don’t you think the line between charitable organizations and other profit-making companies gets blurred after this ruling? There are a whole lot of companies that have been created to promote some cause or another. Shouldn’t they also get a ‘charitable’ status just like BCCI?

Food for thought?

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