"The cabinet has approved amending the law so that India is not deprived of the tournament," Chidambaram told reporters after a cabinet meeting chaired by Prime Minister Manmohan Singh.

According to current regulations, income tax is imposed on all earnings, including gate receipts and sponsorships, for international sporting events held in the country.

The International Cricket Council (ICC) had said in March that the biennial Champions Trophy, the second biggest event after the World Cup, could be taken away from India and handed to Pakistan if tax exemption was not granted.

Indian cricket officials, led by former ICC chief Jagmohan Dalmiyam, met Chidambaram and Singh earlier this month to request a waiver for the tournament which raises funds for the ICC's development programme.