TDS on film, satellite and music distribution rights

The I-T department is now in the process of sending notices to the film producers, reports Manish Pachouly.

Tax Deducted at Source (TDS) will now be applicable to royalty and payments made for transferring of film distribution rights. This comes following a recent amendment in the Income Tax (I-T) Act and the applicable TDS rate would be five per cent.

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The overseas, video, satellite and music rights would also be charged TDS.

The I-T department is now in the process of sending notices to the film producers asking them to give copy and details of the agreement that dealt with such rights. Last month, officers of TDS wing of the I-T department issued such notices to seven producers.

A senior I-T officer said on condition of anonymity, as he is not authorised to speak to media, that the amendment was made in section 194 J of I-T Act, which, added these areas to existing ones. Earlier, TDS was applicable only on technical and professional fees payment in this section.

The officer said that the notices were sent because the film fraternity doesn't know about this amendment, as it is new. He said that the notices were sent under section 133 (6) of the I-T Act, which gives right to officers to collect information.

He further said that all agreements above Rs 5,000 would involve TDS payment where the party buying the rights have to deduct TDS while making payments to the other party and pay it to the I-T department by seventh of next month.

The I-T officers expect good collection with this amendment as for an A grade film, all such rights collectively involve payments in crores. "We are collecting data on this to find out how much money does transferring of such rights involve," the officer said.

When contacted Chief Commissioner of Income tax (2), PC Chhotaray who is currently handling the additional charge of TDS refused to comment on the issue.
manish.pachouly@hindustantimes.com