The Income Tax department is minutely studying the revenue-sharing agreements between BCCI, Indian Premier League (IPL) franchisees and hosts South Africa as the department believes it will be a major loser with the extravaganza set to get rolling in South Africa next month.

IPL-2 is expected to generate around Rs 700 crore revenue through broadcasting rights, ground sponsorships, badges, ticket sales and endorsements. However, IPL officials are fearing that the franchisees and BCCI could suffer losses worth Rs 200 crore due to the shift in venue.

Last year, the government had received over Rs 90 crore through tax deducted at source (TDS) from payments made in the IPL. BCCI and the IPL franchisees liability this time will only be known once returns are filed and scrutiny is made, a senior income tax official said.

The loss to the exchequer is on account of India and South Africa having a double taxation avoidance agreement under which anyone taxed in South Africa will be exempted from being taxed again in India.

Thus, any player making an endorsement over television or on any other platform in the host country and getting paid there would have no tax obligation on that count in India.

Recently, Bollywood actress Aishwarya Rai managed to get tax relief on earning through her performances in the UK and US. The I-T Appelate Tribunal (ITAT), Mumbai had allowed her to take credit for the tax already paid in UK and US.

The I-T department had earlier wanted to tax the actress on income of Rs 16 crore through her performances abroad.
Sources said that the net tax flow from cricket may increase after a proper scrutiny of BCCI and its franchisees receipts and payments is done.

The IPL team franchisees get the lions share of the earning on broadcasting fees earned by the BCCI. This time around, with a new deal being worked out for broadcasting, it is expected that teams will have additional revenue of around Rs 90 crore to share among themselves.