The income-tax department has narrowed down its probe into the Indian Premier League to three franchisees Rajasthan Royals, Kolkata Knight Riders and Kings XI Punjab after initial findings. The department has also written to tax authorities in Mauritius, Bahamas, Cayman and British Virgin Islands seeking details of companies registered there that have invested in these franchisees, as it suspects round-tripping of Indian funds.
The probe is now being expanded with respect to these three franchisees and more information is being sought on source of funds from overseas tax jurisdictions. “The idea is to establish a money trail to ascertain if there was any round-tripping of funds to evade taxes,” said an I-Tdepartment official.
Foreign taxation division within the Central board of Direct Taxes has formally written to tax authorities in these jurisdictions seeking necessaryinformation on these entities.
Round-tripping essentially implies Indian money going out through unofficial channels and being invested back into India through tax jurisdictions such as Mauritius to avail tax sops available under the double-tax avoidance agreements. Tax authorities suspect that the multi-layered corporate structures floated in various tax havens were essentially a garb for roundtripping of funds.
Initial probe has found these franchisees were in some way linked to the former IPL commissioner Lalit Modi and these linkages are also being probed. Source of funds for payments made to the Board of Control for Cricket in India by these franchisees and investors therein are also under the scanner of the tax authorities.
The I-T officials plan to establish a trail of such payments and information is also being sought from the overseas tax authorities on source of these payment.
In the case of another IPL franchisees violation of tax deducted at source norms on has been found and due action is now being taken to collect the tax with penalty.
Raises demand for Rs 64-cr service tax
The income-tax department has raised Rs 63.93-crore demand on account of service tax from various service providers and stakeholders in the Indian Premier League, reports Our Bureau from New Delhi. The BCCI-IPL is liable to pay service tax on fees received from the eight franchisees, deduct tax on services received from others such as IMG-UK for consultancy services, and payments received in respect of sale of advertisement space. It is also liable to pay service tax on the income from the sale of game rights.