prasad1
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[h=2]I-T Department report blows lid off dodgy dealings.[/h]
It is no secret that the Income Tax Department keeps a watch on Bollywood producers, distributors, and actors, but a recent report has detailed how exactly people behind the glitzy world of the silver screen avoid taxes with dodgy dealings through hawala and hot-money routes.
The first-of-its-kind I-T analysis establishes major evasion practices such as suppression of receipts from movies, using ancillary sources, inflation of expenses and a huge amount of out-of-books payments/receipts, all a “well-established practice rampant in Bombay film industry.”
Past cases
The income tax analysis is based on past cases, existing audit books and several assessment orders passed under section 14A.
It documents how violation of Section 44AA (mandatory maintaining of books of accounts), section 44AB (mandatory audits of books), and section 285-B (statements of payments made over Rs 50,000 by the producers) has become rampant.
The IT Act, 1961 provides for different sections and rules to impose tax on revenue sources of the industry. Sections 44AA, 44AB, and 285-B, Rules 9A and 9B for producers and distributors respectively, and the TDS provisions of Sections 192, 194 C and 194 J are also to be used when making payments to/for actors, directors, editors, special effects experts, logistics contractors, and recording and dubbing studios, among others.
The report finds significant funding from hawala and hot-money routes, portending a grave threat to tax mobilisation, and even to general law and order.
“The movie industry is operating in a volatile environment that is threatening its traditional sources of revenue,” the report says. “It is highly exposed to the black economy and poses myriad challenges to the tax administration.”
In 2011, a leaked cable released by Wikileaks had spoken of the film industry’s underworld connections, and that “it welcomed funds from gangsters and politicians looking for ways to launder their ill-gotten gains, known in India as ‘black money’”. In 2012, a sting operation by news website Cobrapost had caught leading producers and directors allegedly admitting on camera how the industry is being used to convert “black” money into “white”.
Further verification and investigation by The Hindu into these dodgy tax practices stood validated from the personal account of scores of technicians, line producers, distributors, confirming the practices as commonplace on film sets.
http://www.thehindu.com/news/cities...y-into-white/article7959212.ece?homepage=true
