The All India Football Federation (AIFF), India’s apex football body, which is already floundering in financial mire, received another financial blow recently.
An Indian tax law, which is now nearly four year old, has forced the federation to refund around Rs. 8 crore in taxes. Besides, the federation has been asked to return as much as Rs. 3 crore in additional taxes.
Kushal Das, general secretary for AIFF, said that this has “severely affected” the federation’s cash flow, adding that the AIFF has already approached the income tax (IT) commissioner and that two hearings have been held.
The AIFF has still not paid East Bengal, which won the Federation Cup in October 2012, its prize purse of Rs. 25 lakh. Besides, the first six teams of I-League 6, which concluded in May 2012, are yet to receive their prizes.
Stating that AIFF had signed a four-year deal with Fifa in a bid to develop young football talent, improve efficiency, and install a player registration system, Das said that the federation is unable to implement the deal because of financial restraints.
The Finance Act of 2008, which became effective on April 1, 2009, re-defined the term “charitable purpose,” as a result of which AIFF has to pay a huge amount in taxes. The new law considers most of its activities to be commercial in nature.
Currently, the AIFF has prepared papers to contest the IT department’s claims. It has cited a Central Board of Direct Taxes circular, issued on Dec 19, 2008, in which it is mentioned that organizations focusing on development are exempted from having to pay taxes.
An official, who begged to remain anonymous, said that the AIFF’s financial report of the last fiscal year showed a deficit of almost Rs. 7 crore. However, Das refused to make any comments regarding this.