Not many in the entertainment world may be aware of the repercussions of the applicability of section 285B of the Income Tax Act to more businesses in the entertainment industry, proposed in the Union Budget presented in Parliament on February 1. It will entail cumbersome work for content creators and event management companies. Most of the details sought under the said section are actually already being given by the content creators and event management companies while filing their TDS returns. It seems strange that while on the one hand, the finance minister, during her introduction of the ‘Ease of Doing Business 2.0 & Ease of Living’, referred to reduction of 25,000 compliances and repeal of 1,486 union laws, applied section 285B in the Income Tax Act to more entertainment companies on the other, which would entail immense duplication of work for businessmen in the world of entertainment.
Section 285B requires filing of a statement in the prescribed form (Form 52A) within the prescribed period. The requirement is to provide details of all parties to whom payments in excess of Rs. 50,000 are made during a tax year. This was earlier applicable only to producers of cinematograph films. Under the new Finance Bill, these provisions have now been proposed to be extended to businesses undertaking event management, documentary film production, production of TV programmes, production for OTT or any other similar platforms, sports event management, other performing arts, etc. Compiling the details needed under section 285B would be an onerous task and is a mere duplication of work as similar data is already being gathered by the government in TDS returns filed by the businesses sought to be included under the provisions of section 285B. This when these businesses are already reeling under the adverse impact of the Coronavirus pandemic.
According to Bimal Parekh, Chartered Accountant to many film industry people, business houses engaged in the abovementioned production activities would do well to request the government to repeal the applicability of the provisions of section 285B to companies other than those producing cinematograph films as this would be in line with the government’s commitment to reduce compliance requirements and enhance the ease of doing business. Event management and production companies generate a lot of employment and hence this abolition will go a long way in helping this industry do away with unwanted repetitive compliances which really don’t add any value for the tax department as well.
Pertinent to note that there are many other businesses/sectors which are far more unorganised than the businesses involved in the production of documentary films, TV shows, OTT content and event management.