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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.

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