MUMBAI: Tax collectors, widening the net, are fishing for information on high-profile Bollywood moviemakers and actors. Top production houses have received missives from the Central Board of Excise & Customs (CBEC) asking them to spell out amounts paid to
stars like Aamir Khan and Ranveer Singh.
The service tax division of the CBEC has reportedly asked the actors to disclose payments received from the likes of Yash Raj Films and Salman Khan Films. Sources in the glamour world believe the taxman is fishing for 'high-profile' defaulters as the onus of depositing service tax falls on the actors.
"Service tax division has recently sent letters to Yash Raj Films, Salman Khan Films and actors, including Aamir Khan and Ranveer Singh, to disclose payment details," a person aware of the development said. "These enquiries are sent by the intelligence officer under the division, asking for information," he said.
"The department seems to be obsessed by Bollywood. Often they are directed to reply in a week," he added. Incidentally, between Yash Raj Films, Salman Khan Films (SKF), Aamir Khan and Ranveer Singh, all the blockbusters of the last 3-4 years are covered — these include Ek Tha Tiger, Dhoom 3, PK, Bajirao Mastani, Bajrangi Bhaijaan and Sultan.
A producer on condition of anonymity said, "We have been getting letters and notices from the tax authorities for some time. The film industry, especially big producers, directors and actors, are on radar of the officials because they are high-profile names."
He said that in film business, the "understanding of tax matters is a bit poor."
Another producer, however, added that mostly the top actors and producers have sorted their financial affairs and are complying with the "law of the land".
"With studio model in place, a lot of financial cleansing has already happened so these guys need not worry. The mid-guys are the ones who are either unaware or dealing in cash. They will find their life getting more and more difficult."
According to experts, actors, who generally get paid in tranches by producers, are liable to deposit the service tax. "If an actor gets Rs 1 crore in four equal tranches, it is his or her responsibility to pay service tax on each of the tranche. Sometimes, actors say that they have not received the service tax amount from producer, who blames the studio. But in the eyes of the authorities, the actor is responsible to pay the service tax on the amount," says a top executive with a big film studio with direct understanding of the deals. He added that the problem crops up because of complex deals with actors, which include share of satellite rights of films.
Frank D'Souza, partner, entertainment and media sector, PwC India, said, "While these notices are case specific, there is always a question of classification, i.e. whether the transaction being queried upon is that of a provision of service or sale of goods, especially in the context of intangible. The issue is hence whether it will attract service tax or VAT or both. There will always be this confusion: however, the introduction of GST will make this issue redundant."
stars like Aamir Khan and Ranveer Singh.
The service tax division of the CBEC has reportedly asked the actors to disclose payments received from the likes of Yash Raj Films and Salman Khan Films. Sources in the glamour world believe the taxman is fishing for 'high-profile' defaulters as the onus of depositing service tax falls on the actors.
"Service tax division has recently sent letters to Yash Raj Films, Salman Khan Films and actors, including Aamir Khan and Ranveer Singh, to disclose payment details," a person aware of the development said. "These enquiries are sent by the intelligence officer under the division, asking for information," he said.
"The department seems to be obsessed by Bollywood. Often they are directed to reply in a week," he added. Incidentally, between Yash Raj Films, Salman Khan Films (SKF), Aamir Khan and Ranveer Singh, all the blockbusters of the last 3-4 years are covered — these include Ek Tha Tiger, Dhoom 3, PK, Bajirao Mastani, Bajrangi Bhaijaan and Sultan.
He said that in film business, the "understanding of tax matters is a bit poor."
Another producer, however, added that mostly the top actors and producers have sorted their financial affairs and are complying with the "law of the land".
"With studio model in place, a lot of financial cleansing has already happened so these guys need not worry. The mid-guys are the ones who are either unaware or dealing in cash. They will find their life getting more and more difficult."
According to experts, actors, who generally get paid in tranches by producers, are liable to deposit the service tax. "If an actor gets Rs 1 crore in four equal tranches, it is his or her responsibility to pay service tax on each of the tranche. Sometimes, actors say that they have not received the service tax amount from producer, who blames the studio. But in the eyes of the authorities, the actor is responsible to pay the service tax on the amount," says a top executive with a big film studio with direct understanding of the deals. He added that the problem crops up because of complex deals with actors, which include share of satellite rights of films.
Frank D'Souza, partner, entertainment and media sector, PwC India, said, "While these notices are case specific, there is always a question of classification, i.e. whether the transaction being queried upon is that of a provision of service or sale of goods, especially in the context of intangible. The issue is hence whether it will attract service tax or VAT or both. There will always be this confusion: however, the introduction of GST will make this issue redundant."
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