8,083.80-170.0
Stock Analysis, IPO, Mutual Funds, Bonds & More

I-T department surveys 7 film production companies

Dharma Productions, Balaji Telefilms quizzed over lower TDS deduction while paying 'extra' artistes.

Last Updated: Feb 24, 2020, 08.20 AM IST
0Comments
Agencies
tax---agencies
Representative Image
MUMBAI: The status of ‘extras’ — men and women who hang around film studios to eke out a living and fleetingly appear on screen as wedding guests, shoppers in a mall or in a crowded city street — is the bone of contention between the tax office and some of the Bollywood production houses.

The Income Tax (I-T) department last week conducted a survey on seven production houses, including Karan Johar’s Dharma Productions and Ekta Kapur’s Balaji Telefilms, amid suspicion that these companies have not deducted enough tax while paying wages to extras. Other houses which came under glare are Excel Entertainment (the company formed by producer Ritesh Sidhwani and Farhan Akthar), Vashu Bhagnani’s Pooja Entertainment & Films, Maddock Films — a new-age production house set up by director-producer Dinesh Vijan, Luv Films (founded by Luv Ranjan and his friend Ankur Garg), and Ajay Rai-owned Jar Pictures.

For decades, film producers have been deducting 2% tax — or, ‘tax deducted at source’ (TDS) — before paying extras. For the dream merchants of Mumbai, extras are unskilled hands, often described in Hollywood as ‘human props’, in movies or soap operas. However, to the taxman, extras, despite their brief appearances on screen, are ‘skilled’ people – for whom a higher TDS of 10% should be applicable.

A senior tax official confirmed that verification raids were conducted on some production but did not share details. “No decision has been taken,” said the person. But among tax practitioners the surveys were a reflection of the government’s pressure on tax officers to meet stiff revenue targets. “Where is the need for a survey? The department can carry out open investigation by asking the respective parties to appear in the tax office. It boils down to harassment,” said a person familiar with the recent exercise.

Under-Scanner


Differences between the tax department and assessees have also cropped up on the appropriate TDS rate on rentals paid on equipment hired for shoots.

Officials of Balaji Telefilms refused to comment on the matter while Bhagnani, whose latest release ‘Jawaani Jaaneman’ is running in theatres was unavailable till filing of this report. Officials of Dharma and Excel (maker of ‘Gully Boy’), as well as Luv Ranjan (best known for comedy films like ‘Sonu Ke Titu Ki Sweety’) and Dinesh Vijan (whose company produced the recently released ‘Love Aaj Kal 2’) did not respond to ET’s text and calls.

Of these Bollywood houses, the largest is Dharma (turnover of just under Rs 500 crore in FY19), followed by Balaji (Rs 460 crore in FY19) and Pooja (Rs 35.57 crore). The financials of others were not available.

“The TDS rates for extras have been 2% for almost 4 decades. These hands are come via labour contractors and can hardly be called skilled artistes. The TDS applicable for stars and other regular actors is 10% and there is not much of a dispute on that,” said another person.

Also Read

Resul Pookutty launches film production company with former Reliance COO

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service