The income tax (I-T) department has alleged that four popular television entertainment companies have evaded Tax Deducted at Source (TDS) of around Rs 200 crore.
The I-T department’s TDS wing conducted surveys at the offices of Sony Entertainment Television, Zee Network, Viacom18 Media Private Limited (owner of Colors channel) and Star India Private Limited on Wednesday and Thursday.
At least 100 officers and staff participated in the surveys. “It was a routine TDS survey,” a spokesperson for Viacom18 said. “We shared with them all the relevant documents and affirmed our stance that our TDS deductions have been in accordance with the taxation provisions.”
A spokesperson for Zee said: “We will be able to comment only tomorrow.” Spokespersons for Star and Sony refused to comment.
An I-T officer, requesting anonymity because he is not authorised to speak to the media, alleged that in the last three years, the channels calculated TDS at the rate of 2 per cent instead of 10 per cent on payments amounting to Rs 2,500 crore.
These payments were made towards carriage fees paid to cable operators for telecasting channels of broadcasting companies on the prime band, and production expenses such as transfer of rights, which
is included in the definition
of royalty in the Income Tax Act.
The four companies calculated TDS at only 2 per cent on carriage fees paid. This rate is applicable on payments made to contractors.
“These payments were for technical services where 10 per cent TDS should have been deducted,” the officer said adding that the four companies had paid Rs 1,000 crore as carriage fees in the last three years.
Three of the companies, Sony, Zee and Viacom18 (Colors), calculated TDS at 2 per cent instead of 10 on production expenses amounting to Rs 1,500 paid in the last three years.
The officer said Star calculated TDS accurately at the rate of 10 per cent on production expenses paid. The TDS wing in Mumbai has conveyed its findings to its counterparts in other cities, including Delhi, Kolkata and Chennai.
The department’s TDS wings in other cities are also likely to inquire into payments made by television channels that have offices there.