GST on Sporting events

Sports are one of the emerging industries in our country. There are various government and private organisations that conduct sporting events. Some of the major sports events conducted in India are the Indian Premier League (IPL), Pro Kabaddi League (PKL), Indian Super League (ISL), etc.

Income for these bodies includes participation fees, sponsorship fees and ticket sales. This article aims to concentrate on GST implications on the above incomes.

Scope of supply 

Supply under GST includes sale, transfer, barter, exchange, licence and lease or disposal made for a consideration by any person for business purposes.

Participation fees are received from players for participating in the sports event. In return, the sports body provides services such as conducting matches, recording scores and declaration of winners. Hence, GST applies to participation fees.

Sponsorship fees are received from business organisations that purchase the franchise/team or provide sponsorship to the sports team for their business promotion.

GST is applicable when a business entity purchases a franchise/team on the bid amount paid. When a business entity provides sponsorship to the sports team, the business entity is required to discharge GST under reverse charge.

Sales of tickets to audiences who have come to enjoy the match are also covered under GST. The GST is collected on the base price of tickets. If any additional services are provided (for example, valet parking), the same is also covered under GST.

Tax rate and HSN code

The sale of tickets attracts 18% GST under HSN code 998554 when the event is organised by any government sports body (for example, BCCI, All India Football Federation). If any private organisation contains the event, the GST rate applicable will be 28%.

Sponsorship fees for brand promotion attract 18% GST under HSN code 998397. Participation fees are covered under HSN code 9983, attracting 18% GST.

Schemes available for small taxpayers

The composition scheme is available for manufacturers or traders whose turnover during the financial year does not exceed Rs. 1.5 crore and service providers whose turnover during the financial year does not exceed Rs. 75 Lakhs.

The scheme is optional and helps the small taxpayer get rid of regular GST compliances. The rate of GST is much lower than the normal GST rates (for example, 1% for manufacturers or traders, 6% for service providers).

However, these businesses would not be able to utilise input tax credit paid on their expenses.

Input Tax Credit 

Sports organisations incur various expenses to conduct the events smoothly. These expenses include advertising, promotions, sports equipment purchase, security hiring, ground and pitch maintenance, fees to umpires and commentators, etc.

Since the above expenses are incurred for the business purpose of a sports organisation, the input tax credit can be used to discharge the GST liability, provided they do not opt into the composition scheme.

Exemptions

The exemptions under GST available to sports organisations are listed below:

• A charitable entity registered under Section 12AA of the Income Tax Act providing services by training or coaching in recreational activities relating to arts, culture or sports is exempt.
• Sponsorship of sporting events organised by:
  • National sports federation, or its affiliated federation
  • Association of Indian Universities, Inter-University Sports Board, School Games Federation of India
  • Central Civil Services Cultural and Sport Board
  • Indian Olympic Association
  • Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme
• Services provided to ‘recognised’ sports bodies by:
  • Individual as a player, referee, umpire, coach for participation in sporting events organised by ‘recognised’ sports bodies.
  • Another ‘recognised’ sports body.

Recognised sports bodies include the Indian Olympic Association, Sports Association of India, and the International Olympic Association.

FAQs

Whether trip fees collected from students by the sports academy used to spend on organising trips for students are taxable under GST?
 

Services relating to sports provided by an entity registered under Section 12AA of the Income Tax Act are exempt under GST. 

If the sports academy is not registered under Section 12AA of the Income Tax Act, organising a sports coaching trip shall be a commercial activity. GST will apply to the amount collected by students. 

If a sports academy is registered under Section 12AA of the Income Tax Act, then such services will be exempted. 
 

Mr A started a business providing sports facilities and restaurants. Mr A incurred capital expenditure for his whole business. Mr A pays GST at 5% on the sale of food. Hence he is not eligible to avail input on the purchase of food items. 

There are commonly used services for sports facilities and restaurants, such as internet and telephone. What will be the treatment of ITC on commonly used inputs?  
 

We need to follow the guidance given under CGST Rules 42 and 43. The rules state the treatment of ITC commonly used for different businesses. The restaurant business pays GST at 5% and is not eligible to utilise any ITC. So if Mr A wants to utilise any ITC, he has to provide taxable services.

If Mr A’s sports facilities fall under any exemption provided under GST, he will not be able to utilise any ITC. But if the same is taxable, Mr A will be allowed to operate a portion of ITC on commonly used inputs.