August 14, 2003

Don't exempt the Ferrari

What should be done about Sachin Tendulkar's Ferrari? Tendulkar applied for a duty exemption for it on the grounds that it was a gift to him for sporting feats accomplished while representing India, and that it would be unfair to penalise him for it. The objections are based on the argument that the laws that hold for other Indians should hold for him too - and that his considerable achievements don't elevate him above the law.

There is a precedent that Tendulkar could point to. In 1985, Ravi Shastri won the Champion-of-Champions award at the World Championship of Cricket held in Australia, and got an Audi for his efforts. Shastri was granted a customs duty exemption for that. On that occasion, though, the car was given by the tournament organisers for an award presented officially by them. It accompanied what was effectively the man-of-the-tournament award. Tendulkar's Ferrari, on the other hand, was given to him by his sponsors, Fiat.

Sceptics have argued that the gifting of the Ferrari could have been worked out between Tendulkar and Fiat at the time they were working out his endorsement contract - and that it thus represents a payment on which he is avoiding paying tax. Whether or not this is true is irrelevant. If the exemption given to Tendulkar stands, it will set a precedent for exempting other such gifts to celebrities. It will be impossible to determine which are genuine gifts and which are just a manner of routing payments without paying tax. This waiver of duty, unlike the one given to Shastri, is thus unjust and wrong.

The thumb rule as regards such requests for waivers from sportsmen, thus, should be simple: if the item is won at a tournament for achievements on the field, exemption is justified; not so if it is a gift from a brand the person endorses. The next time Fiat wants to gift Tendulkar a Ferrari, it should bring it into India, pay the relevant import duty, and then gift it to him. And if it is then liable for gift tax, he must pay it. India is obsessed with celebrities - none more so than its politicians - but the law should be equal for all.

Amit Varma is managing editor of Wisden CricInfo.