The Indian government has cleared the way for the country to host next year's ICC [Images] Champions Trophy tournament.

The International Cricket Council (ICC) had said the biennial event, second in importance only to the World Cup, would be given to India provided the proceeds were made tax-free.

The event would have gone to Pakistan, which has already announced a tax-exemption, if the Board of Control for Cricket in India (BCCI) had not got the clearance by the end of May.

"After examining the Indian cricket board's request, a decision was taken that [tax] exemption should be granted," finance minister P Chidambaram announced on Thursday.

India had been the original choice to stage the 2002 edition. However, the government refused to provide tax relief and the event went to Sri Lanka [Images].

The minister said government had decided to extend the benefit to all major sporting events held in India.

"A decision to provide tax exemption to international sporting events would result in awarding of rights to hold the Champions Trophy 2006, but also subsequent international sporting events.

"This will not only promote sports but will also result in revenue gain from various sources, especially tourism," he said.