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The Indian FA's hopes of clearing their debt and returning to profitability have been all been dashed due to tax laws.

Any hopes of the All India Football Federation (AIFF) hopes of turning the financial red tide over have been dealt a great blow. The debt ridden federation who were due a Rs. 8 crore refund under the original Financial Act, 2008, have now been told that not only will they not qualify for the lump sum, but they also have to stump up Rs. 3 crore worth of taxes.

“It has severely affected our cash flow,” said the AIFF General Secretary Kushal Das to the The Hindustan Times. Das also admitted that the Commissioner of Income Tax (Appeals) had already been approached and two hearings had been held.

The news of taxation comes at a particularly turbulent and depressing time when the AIFF have neither been able to pay East Bengal the prize money for winning the Federation cup nor reward the top 6 teams in the I-League which finished last May.

"With FIFA, we have made a four-year strategic plan to be implemented from 2013. The plan focuses on youth development, improving operational efficiency and putting in place a player registration system. But money is proving a big deterrent," explained Das.

An amendment to the previous Financial Act of 2008, effective April 1 2009, altered the definition of “charitable purpose”. The AIFF’s activities have been excluded on the basis of these amendments, as the act now defines their work as commercial activity.  

This in turn has led to the AIFF being hugely taxed, lamented Das. However, the AIFF are fighting tooth and nail to get the amendments overturned citing a December 2008 circular from the Central Board of Direct Taxes, stating that organizations carrying out development activities would be exempted from being taxed.