Sports entrepreneurs are finding themselves in the dark about the Goods and Service Tax status. The response in the industry is a mixed one. There is confusion and there are worries over uncertainties.
The concept of sports industry in India is at a stage where is needs gestation period. Cricket is an exception. The other sports venture are either investments for future, or not appropriate ROIs for the money and efforts put in. Sport as an industry is not ready to bear the burden of taxes at least at this stage. There is a huge commercial and market divide between cricket and other sports in the country. Whereas cricket at the top level has become a guaranteed money-spinning business, for other sports it’s struggle for survival to cruise to an anticipated better future.
GST ON SPORTS TICKETING
The new tax mechanism for ticket sales, has a provision for complete exemption on tickets priced up to Rs 250. But for others, it’s flat 28% on so called commercial sport events run by private entrepreneurs. The national sports federations, which hitherto enjoyed an exemption, too are brought under the tax net.
SPORTS NEED SUPPORT
The trade of sports is not ready to bear the tax burdens. “This (the taxation system) is not going in the right direction for sports promoters. It (GST) will definitely affect ticket sales. Cricket and other sports cannot be kept in the same bracket. If sports structure it the country has to be revived, there should be strong incentives for bringing sports fans to the stands. Sports at this juncture needs to be treated as a priority industry,” says Neerav Tomar, CEO and Managing Director, IOS Sports & Entertainment, the company under the banner of its subsidiary IOS Boxing is also promoting professional boxing in the country.
“In seventy years since Independence, sports has not grown as it should have. Now, corporate is coming forward to support the system. Sports promotion is a long-term investment, which needs special considerations on all aspects,” adds Neerav.
The views are echoed by sports professional and media rights veteran Ashish Chadha, Chief Executive, Sporty Solutionz. Ashish Chadha: “Any tax on sports promoters is a deterrent to sports growth. Government must consider sports ventures as startups. It is important to give promoters and sports entrepreneurs special tax relief packages for growth of sport as an industry and create an ecosystem for sports to grow professionally.
“There is a need to treat sports like an upcoming industry, which needs special packages, incentives and tax reliefs.”
Turn around in the galleries is a parameter to define the success of a sporting event. Organisers either under compulsion or to fill the galleries are forced to distribute complimentary, free tickets. The GST regime will invite tax on the “complimentary” tickets distributed without monetary considerations.
MORE CLARITY AWAITED
Industry is also not clear on how the new tax regime will function. Will 18% or 28% be the one single tax or will there be other State or local body levies. The ones running the cash-rich Indian Premier League have concerns over this uncertainty. A flat tax of 28% is welcome, but any other addition will cause serious concerns.
“If it is a flat 28% on gate moneys, I will say it is still welcome. However, if there are other levies from States and local authorities, then it is going to become very, very difficult. We have not received any Central or State notification so far. Thus, there is no clarity what is coming up our way,” says Hemant Dua, Chief Execuive, GMR Sports, franchisee owners of IPL team Delhi Daredevils.
It’s a wait and watch policy for the Daredevils management. “ISL is coming up, we will see to have a fair idea. As of now there is not much of comment about. Yes, there are concern still. Till the time we get a clear picture on GST.”
The seasoned pro in the ticketing trade also see some positives under the GST regime. “GST cannot just be defined as good or bad. For some it’s good. For some others it will be taxing. In the earlier tax regime the overall tax on tickets sales ranged between 25% and 45%. The territory where sports enterprises would pay 25% earlier, will have an additional burden of 3%. Where it was an aggregate of 45%, the event owners get a benefit of 17%. There were some other places with complete tax waiver on sports tickets. Now, organising an event there will invite a levy of straight 28%. So it’s a mixed bag. A number of things are still not clear,” says Satish Viswanathan, Associate Vice President, Ticketgenie.
“For ticketgenie as a ticketing agency, the biggest relief is the end of Entertainment Tax regime. That was one of the most complicated one even from operational aspects. Earlier, all tickets were to be taken the Entertainment Tax authorities, total tax to be paid in advance and then the tax department will physically stamp each ticket. Then, unsold tickets would be returned to the tax authorities to seek refunds, which will take months to come after a long process.
“Now you calculate a fixed single tax based upon the face value of the ticket and deposit the same with the tax department with a statement of sold tickets,” adds Viswanathan.
National Sports Federations will be the worst hit. The sports’ governing bodies, which organize ticketed events, will have to a tax @ 18% on the ticketing revenues. InsideSport reached out to several national sports federations. There is an anguish, subsided by the caution to not to speak against the ‘system’. After all these bodies run and survive on government money.