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BTC softens the blow on owners

  May 3 , 2013
   

The Bangalore Turf Club has sought to soften the blow on race horse owners who were hit hard by the Income Tax Department claim of 30 per cent TDS under section 194 BB which does not allow income to be set off against losses. The stake money module has been re-worked and under the new scheme that will be in force from the ensuing summer season, race horse owners would stand to lose only Rs 1 crore as against Rs 4 crore under the old stake money pattern. A subsidy of Rs 7,000 per horse per month has been worked out which should ease the burden on the owners who are hit by the ever rising cost.

Under the existing arrangement, 27 per cent stake money is taken away by way of commission for trainers and jockeys which is 10 and 7.5 per cent respectively and towards other welfare funds. Now the stake money has been bifurcated and the cut for the trainers and jockeys has been clearly identified. Under a private arrangement, most trainers take 20 per cent of the winning stakes as commission on sweepstakes races. Under the revised scheme, the owner of the winning horse in a race meant for horses rated 80 and above, gets Rs 1,92,000. The trainer will directly get Rs 24,000 while the jockey`s cut is Rs 18.000. The stake money given for the same race during the last summer was Rs 2,64,000 but it has been cut to Rs 2,34,000 so as to ensure that the club directly contributes money to various welfare funds which used to work out to about 10 per cent of the stake money. The total stake money for a race for horses rated 80 and above now stands at Rs 4,79,000 as against Rs 5,41,000. Similar pattern has been defined for other category races.


The items which does not come under the ambit of any tax are fodder subsidy which works out to about Rs 75.60 lakhs, reimbursement of participation expenditure to owners of local horses at Rs 2000 per run for a maximum of four runs which is about Rs 40 lakhs; reimbursement of expenditure incurred towards hay and bedding etc at Rs 1500 per month for 700 local horses which amounts to Rs 42 lakhs; reimbursement of expenditure incurred towards veterinary expenses at Rs 2000 for 700 local horses for four months which is put at Rs 56 lakhs which in all works out to about Rs 2.13 crores. The contribution to trainers` welfare funds (about Rs 12.54 lakhs) and jockeys` welfare fund (Rs 25 lakhs) are the additonal benefits given. The turf club in all will be incurring an additional burden of over Rs 1.25crores. The deductions towards welfare fund is proposed to be discontinued for this season.

It may be recalled that Income Tax Department has made a claim of 30 per cent TDS on stake money with retrospective effect for the last five years. The Bangalore Turf Club has obtained a stay on retrospective payment but has been ordered to cut the same henceforth. The matter is pending adjudication at the High Court of Karnataka. The court has reserved the same for orders which will be taken up after the summer vacation which ends on May 28. In the meanwhile, Hyderabad Race Club`s writ against the Income Tax claim of TDS on stake money has been dismissed. The Hyderabad Race Club has already written to all individual owners the amount of TDS money and the interest thereon to be paid to Income Tax department. The TDS claim has also been made on Madras Race Club. However, the Royal Western India Turf Club and Royal Calcutta Turf Club haven`t received this claim from the Income Tax Department.

The Turf Authorities of India are to meet in Bangalore on May 15 to deliberate on the matter and also decide on the course of action in order to obtain relief from the same which otherwise is bound to cripple racing activity. There is also the additional problem of the Income Tax Department claim on tote collection where aggregation of income of each individual has been sought and 30 per cent TDS is the demand. This claim if enforced, will be a big setback for Bangalore, Mysore and Hyderabad Race Clubs where betting on club operated tote pools form a major chunk of the income to the turf clubs which in turn is sustaining the sport. The tote collection at RWITC is negligible. The Income Tax Department has assessed the TDS on tote for the last five years at Rs 97 crores on Mysore Race Club. MRC lost its case in the High Court on this assessment and is now moving the Tribunal for relief.

 
 
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Total Comments : 3
Posted by Rajedra on ( May 3 , 2013 )
It is good to see BTC take the job of absorbing the shock of 30 per cent TDS on stakes which would have meant a loss of over Rs 4 crores. Now the taxes have been brouht in the region of Rs 1 crores for the owners whch is good thinking. BTC deserves praise for their thoughtful action. I am sure other clubs too will follow Bangalore model.
 
Posted by Anil on ( May 3 , 2013 )
Thanks for explaining the new stake structure with so much clarity.
 
Posted by anilxk on ( May 3 , 2013 )
Commendable job by BTC.Now the management is doing their work
 
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