Indian Tax Office Targeting Sportsmen

by Mary Swire, Tax-News.com, Hong Kong

31 December 2010

Indian cricketer Harbhajan Singh has been targeted by the tax man for not paying service tax on income earned during the first and second seasons of the Indian Cricket Premier League (IPL) where he represented Mukesh Ambani’s Mumbai Indians.

The tax office is currently calculating the actual amount of tax owed and Mr Singh will be served a notice on his return from South Africa where he is currently playing. Undisclosed sources have estimated the figure to be around INR10m (USD222,000) from promotional activities for his IPL franchisee.

This fine comes not long after a similar one served on another Punjab cricketer, Yuvraj Singh, and it has been suggested that prosecution could also be a possibility.

Service tax was brought into force with effect from July 1, 1994. It extends to the whole of India except the state of Jammu & Kashmir. Initially, the service tax was levied on just three types of services including those provided by telecommunications operators, stock brokers and general insurers, at a rate of 5%. The service tax net has since been widened to cover dozens of other services and the rate was raised to 10%, plus a 3% of service tax education surcharge (for an effective rate of 10.3%) from February 24, 2009.

Recommended