Retracting Tax Exemption for Sports Coaching and Training Facilities Belies Sporting Ambitions of India
With the new Goods and Services Tax regime still taking
roots in the country, its effects continue to be felt in different walks of
life. The field of sports has also witnessed some upheavals. Concerns have
already been expressed by many sports personalities as well as those engaged in
sports businesses regarding the heightened costs of sports equipment because of
the newly applicable GST rates. Most sporting equipment witnessed a steep rise
in price due to the new GST rates including badminton shuttle cocks, tennis
balls and many other sporting essentials.
What is more, GST law has also negatively impacted upon private
sporting facilities in India. As per the
Notification no. 25/2012 of the now defunct service tax which came into effect
on the 20th June 2012, the then Central Government of UPA-II had
announced exemption under the section 66B of the service tax act to those who
were providing services by way of training or coaching in recreational
activities related to arts, culture or sports. This was done, according to the
notification, since government was satisfied that it was necessary in the
public interest.
However, as per new GST law, this exemption has been removed
for the facilities that provide training or coaching in sports except for those
that have been registered as charitable or religious trusts under the section
12AA of the Income Tax Act. Meanwhile exemptions for those providing training
or coaching in arts and culture have been continued as before. Moreover, the
GST rate applicable for the service providers in sports coaching and training
industry is that of 18%, the highest rate under the law.
Facilities owned and run by the government or those being
run on public-private partnership model are quite few and the ones that exist
are often lacking in infrastructure or upkeep in face of deficient policy
attention or funding. With a dearth of sporting facilities in most parts of India,
especially smaller cities, imposition of tax levy on these service providers is
bound to impact those who are running commercial establishments providing
sports training or coaching to aspiring players or those interested in sports
as recreational activity. Taking up a sport for recreation or otherwise is
going to prove to be that much costlier with the levy of this tax.
This move of taking away the exemptions for sporting
facilities under GST runs counter against the current government’s own agenda
of promoting sports in the country. This is especially relevant in context of
the government’s flagship programme ‘Khelo India’ which as per its declaration,
available on its website, has been introduced to “revive the sports culture in
India at the grass-root level by building a strong framework for all sports in
our country and establish India as a great sporting nation”.
In order to achieve subsequent governments’ goals for
cultivating sports and health culture among youth and people in general, the
need for affordable sporting facilities cannot be underestimated. In 2014 the
United Progressive Alliance-II (UPA-II) government had come out with the
National Youth Policy. The policy document had identified sports as one of the
priority areas and highlighted the importance of access to sports facilities
and coaching in both urban and rural areas. Despite various schemes and
programmes offered by the central and state governments respectively, the
policy document acknowledges that “Access to sport and physical education
opportunities still remains highly inadequate, especially in rural areas and
the poorer parts of urban areas.”
In this regard it says, “Private sector organisations need
to be incentivised to participate actively in setting up playgrounds and sports
facilities especially in schools, colleges and community areas.” However, by
taking away this exemption for service providers in sports coaching and
training business, under the GST law, it seems that the agenda of promoting
development of sports infrastructure at grassroots level, by encouraging
private service providers, has been rescinded by the current NDA-II government.