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Draft Quick Insight on GST-Entertainment Industry
August, 28th 2018
                      Draft


Quick Insight on GST-Entertainment Industry



       Some Indirect Tax Issues & Resolutions




                                                1
                     Table of Contents


Sr No                 Chapters                  Page Numbers
  1     Preface                                      3-4
  2     Entertainment Industry Sectors               5-7
  3     Registration Issues                          7-8
  4     Statutory Permission Issues & Levy of       8-10
        Local Body Tax
 5      Compliance Issues                          11-16
 6      Input Tax Credits (ITC)                    16-21
 7      Piracy Issues                              21-24
 8      Infringement of Intellectual Property      24-27
        Laws
 9      Sword of Penal Laws & nascent stage        27-29
        of technology laws
 10     Synchronization with other business        29-34
        laws
 11     Conclusion                                 34-35




                                                           2
              Entertainment Industry Sectors


Entertainment Industry is very wide and inclusive term it
encompasses as well as covers several business sectors such
as: -
   Motion Pictures and Televisions Industry
   Cine Actors and Cine Actresses
   Content & Script Writing Industry
   Broadcasting & Telecasting Industry
   Talent and Celebrity Management Industry
   Music & Music Celebrity Industry
   Internet and Digital Media Industry
   Media & Publishing Industry
   Intellectual Property Industry
   Event Management Industry
   Theme and Amusement Industry
   Brand Endorsements and Public Relations Industry
   Logistics Industry
   Merchandising Industry
   Business Support Services Industry
   Any other activities which are ancillary and incidental to
   any of the above activities.


All above listed industries are illustrative only but not
comprehensive in itself because the business activities

                                                            3
connected or interlinked with them are changing
continuously viz. what is considered latest and new today
may become obsolete next day with technology
development happening today and they are integrated &
interlinked with each other very closely or they can act as
independent profit/cost centers for any enterprises. Looking
at the current trend big players in all above sectors are trying
to achieve backward as well as forward integration using the
options of Merger and Acquisition in Entertainment Industry
so that all streamlines of services are available under one
roof.


An attempt has made hereby to discuss some apparent
issues faced by the Entertainment Industry concurrently and
such issues to be addressed by probable solutions as per our
understanding to reach finality of ease of doing business in
India in respect of above industry which are as under: -
   Registration Issues
   Statutory Permission Issues & permission to Levy of
   Local Body Tax in case of Entertainment and
   Amusements Industry
   Compliance Issues
   Admissibility of Input Tax Credits (ITC)
   Piracy Issues
   Infringement of Intellectual Property Laws
   Sword of Penal Laws & nascent stage of technology
   laws
   Synchronization with other business laws

                                                               4
While deliberating and discussing the issues and probable
solutions considerate care has been taken to discuss the
issues holistically without using any technical jargons or
section wherever possible as lot of people using this booklet
may not be familiar with technical terms of law.


                      Registration Issues
Under the old regime, there was an option of centralized
registration on PAN India basis whereby every person can do
the compliance of laws as applicable considering all its
transactions from the permanent.
Under GST, every registered person is required to obtain
separate registrations in each state depending on its nature
of business activities for claiming the set off of local CGST and
SGST which creates the tons of registration issues for the
Business Units.


              Probable Solutions ­ Registrations
  1. In respect of all Registered Taxable Persons providing
     services as defined under the provisions of GST Law,
     conditions of obtaining separate registrations in each
     state either as regular person or casual taxable person
     etc. should be done away with completely so it
     effectively promotes the ease of doing business in India


                                                                5
    for domestic players as well as international players in
    the business arena;

  2. Such clarifications shall be clearly spelt out in law itself
     so there is absolutely no vagueness or inconsistency in
     the minds of all the stakeholders connected with
     compliances pertaining to the registration of any
     business units in general;

  3. As per the provisions of the GST Law, it has been
     provided that by way of the implementation of GST if
     there is any loss of any revenue by State or Union
     Territory then it shall be compensated by Center
     anyways based on the statistical data available on
     records of the Government;


Statutory Permission Issues & Levy of Local Body Tax in case
of Entertainment and Amusements Industry
                   Statutory Permission Issues

  1. One of typical features of Entertainment Industry that
    to enhance the picture quality of the movie and to get
    connected with local people, it needs to be shot at the
    several locations in country as well as outside India;

  2. For doing the shooting within India, any Film
     Productions units requirements several permissions to
     be obtained under local departments/bodies viz.

                                                                6
   Municipal Corporation, Panchayats, Fire Safety
   Departments, Traffic Authorities etc. as well as local
   police authorities etc.

 3. Process of getting such permissions is often time
    consuming as well as expensive and due to manual
    processing of such application it often gets delayed
    which unnecessarily increases the cost of production of
    such films because such permissions flow in time;

                    Levy of Local Body Tax

 4. Under the GST regime, an authority is given to
    Municipality /Gram Panchayat /Regional governing
    council and/or District Bodies to levy collect taxes on
    entertainment and amusement. Such official permission
    is termed as synonymous with Entertainment Tax Effect
    which in principle against the implementation of GST
    because GST is termed as One Nation One Tax and all
    other taxes are subsumed in the GST w.e.f 1st July 2017.

 5. Such levy increases the cost of tickets which acts as
    deterrent for people visiting Multiplex and Theatres in
    general.


Probable Solutions ­ Statutory Permissions/Local Body Tax




                                                            7
1. Sovereign should introduce single window approval
   policy monitored by any appropriate authorities for
   approval of any kinds of permissions required by
   Business Unit of Entertainment Industry for the purpose
   of their activities;

2. Such permissions should be approved electronically
   without any interface required to obtain such
   permissions;

3. Once any permission granted to any Business unit of
   Entertainment Industry and it should not be revoked by
   any of the authorities during the time line specified by
   applicant at the time making such application with
   suitable option for extension if shooting dates are
   extended because of various natural events like
   calamities, public unrest, riots etc. and it can be revoked
   by Order by District Magistrate by detailing the reasons
   of such revocations;

4. For granting such provisions, suitable fees may be
   charged to applicant which would generate revenue for
   the Sovereign to facilitate such shooting in any part of
   the country;

5. If above policy is framed, introduced and implemented
   it will help the industry to concentrate on their core
   aspects of the industry as well as it will save time and
   cost for the industry;

                                                             8
  6. Provision of Local Body Tax as permitted to various
     authorities like Municipality /Gram Panchayat /Regional
     governing council and/or District Bodies to levy collect
     taxes on entertainment and amusement should be done
     away with as it defeats the purpose of introduction and
     implementation of GST in general and plus it would
     reduce the cost of tickets which in turn would help
     Entertainment Industry at large;


                        Compliance Issues

    Returns (Monthly & Annual) & GST audit u/s 2(13)


If we take the holistic view of the Entertainment Industry or
all industries connected with such industry bearing few
established players most of them are either small or medium
sized enterprises operating in these business segment which
always poses the issues of finance to managing their day -to -
day affairs of their business operations as expenses are
incurred upfront and economic outflow arises or accrues at
extremely later date. This industry always faces a dearth of
skilled persons who maintain appropriate and adequate
records for the accurate reporting of information in the
timely manner.




                                                             9
Each Registered Taxable person needs to adhere to the
compliance burden because every registered person is
required to file four monthly GST returns/reports viz. GSTR
3B, GSTR 1, GSTR 2 & GSTR 3 and annual return in GSTR 9C
for each place of business registered in India. Such provisions
result into yearly filing of 49 returns for each registered place
as well as for each registered place all the documentary
records and documents are required to be maintained as the
same can be subject to verification & review if any inquiries
are initiated under the provisions of GST Act 2017 & Rules
thereunder.







For each registered place of business (POB) every Registered
Taxable Person is required to obtain separate GST Audit
Report u/s 2(13) of the GST Act if aggregate turnover as
defined under section 2(6) of the CGST Act whereas under
Income Tax Law or Corporate Tax Law one needs to obtain
only one single consolidated report on the Financial
Statements of the enterprise.


Section 2(6) "aggregate turnover" means the aggregate
value of all taxable supplies (excluding the value of inward
supplies on which tax is payable by a person on reverse
charge basis), exempt supplies, exports of goods or services
or both and inter-State supplies of persons having the same
Permanent Account Number, to be computed on all India
basis but excludes central tax, State tax, Union territory tax,
integrated tax and cess. Similar verbatim definition has been
                                                               10
provided in case of Turnover in State /Union Territory
(Section 2(112)).


If above definition is examined by analyzing several limbs of
definition then aggregate value of all taxable supplies (does it
mean that all taxable value should include Outward as well as
Inward Taxable supplies?), and similarly for Exempt supplies
(including Non-Taxable Supplies) (does it mean that all
exempt supplies (including Non-taxable supplies) values
should include Outward as well as Inward exempt supplies?)


As of now GSTR 2 & GSTR 3 are postponed and in future
Government is trying to introduce single return for all kind of
Inward as well as outward supplies similar to the returns
filing provisions under all old regime.


         Probable Solutions ­ Compliance and GST Audit

                       Returns Compliances

  1. As Government is planning to introduce single return
     for the disclosure of all kinds of outward and inward
     supplies in the most simplistic manner, it should be
     implemented immediately but at the same time such
     system of one return should tasted practically
     envisaging all kinds of transactions and issues;


                                                              11
2. Platform provided for doing the compliance should have
   the capacity as well as bandwidth to handle the traffic
   load on its platform so that all and every type of
   stakeholders shall be able to comply with law in timely
   manner and such platform shall not cause any stress to
   any stakeholders in general;

3. For filing and adhering to various compliances by any
   enterprises for the purpose of reporting, disclosures and
   depositing of government dues in time as per the
   provisions of various laws that are applicable to the
   enterprises all timelines should be appropriately aligned
   in the timely manner so that all stakeholders don't get
   stressed out for doing such compliances and at the same
   time very little time is left out for enjoying their
   personal life. For E.g. TDS dues under Income Tax Law
   needs to be deposited by 7th of succeeding month,
   Employment dues like PF & ESIC needs to be deposited
   by 15th of succeeding month, GST dues needs to be
   deposited by 20th succeeding month and similarly
   compliance calendar for various returns to be filed
   under various laws. If Sovereign as Trade Facilitator to
   promote the ease of doing business then all date should
   be aligned to a single date instead of multiple dates for
   payment of taxes as well as single date for the filing of
   all kinds of returns. Such step will definitely promote the
   ease of doing business in India as well as it will promote
   the well being of business enterprises as it will promote


                                                            12
  effective and efficient working of business enterprises in
  general.

4. If single date is introduced every kind of compliance
   then Sovereign shall provide the opportunity to all
   stakeholders to do compliance in time with
   announcement as well as assurance that no interest or
   no late fee or no penalty or no prosecution would be
   initiated during such transitional time frame.

                       GST Audit Limit

5. First and foremost, clarity is required in respect of
   definition of term aggregate turnover vis-à-vis turnover
   definition as applicable because of various laws
   applicable to any enterprises (viz. Income Tax Law,
   Corporate Law etc.) We feel that definition of turnover
   shall be aligned as turnover/gross receipts/Income from
   Operations etc. as generally understood by business
   enterprises viz. Turnover of Outward Supplies only
   (including Exempt and Non-Taxable Supply) exclusive of
   all taxes with all its grammatical connotations and/or
   extensions;

6. Audit limit of Rs.2 crores as per section 2(13) should be
   aligned by considering only turnover of outward
   supplies which will includes exempt and non-taxable
   supply but it shall exclude all kind of RCM supplies,
   Business Transactions carried out by business unit

                                                          13
  having same PAN Number (viz. Branch Transfers),
  Transactions arising because of related party definitions
  between Employer and Employee and any kind of Taxes
  collected on outward supplies; If such definition is
  aligned then reconciliation issues with reference to
  outward supply reconciliations would be minimized
  which would reduce probable litigation because of such
  clarity in general;

7. In respect of all financial statements drawn by any
   enterprise whether mandatorily and/or voluntarily only
   one single and consolidated financial statements are
   prepared for the purpose of reporting to all stake
   holders interested in reviewing the information of
   business units from various perspective rather than
   reporting individually independently for each units of
   operations or each business vertical, Sovereign should
   ensure that there should be only one single GST audit
   for each unit considering the PAN India Turnover instead
   of separate and independent GST Audit report for each
   business unit based on individual registration numbers;

8. For the purpose of GST Audit if Turnover limit of 2 crores
   if aligned as above then separate disclosure and/or
   Tabulations can be desired in respect of transactions
   between the various units of business units having same
   PAN Numbers and Transactions arising out of Employer
   ­ Employee Relationship or Principle and Agent
   Relationship and so on.

                                                           14
          Input Tax Credits Issues (ITC Issues)

1. In respect of all Registered Taxable persons viz.
   supplier of goods and/or services since GST is
   considered as One Nation One Tax and it aims at
   removing the cascading effect of taxes levied at each
   level of activities on PAN India basis, levies charged by
   way intra-state transactions or inter- state
   transactions should be freely available without any
   restrictions of ifs and but for claiming Input Tax Credit
   (ITC) by either parties receiving and providing such
   goods or services and/or both and only final
   consumers bears the cost of levy of such taxes as he is
   the final consumer of such goods or services etc.

2. ITC credit in respect of Immovable Property Services
   in respect of such services availed in any other state
   other than state in which one is registered as
   Registered Tax Payer which is as under: -

  a. For E.g. In respect of Hotel Accommodation
     services as per the provisions of the section 7,
     Hotel would charge only levy of CGST +SGST
     because such transaction would be considered as
     Intra State transaction in view of place of supply of
     such services even such services are availed and
     utilized by the Service Receiver who might be


                                                          15
     registered in other state which in normal
     circumstances would have attracted levy of IGST.

     b. Similar situations would arise too when
        temporary studio set is constructed for the
        shooting of movie or television serials and/or
        pre-production expenses are incurred by film
        productions units for doing the Reiki of the shoot
        locations along with entire team of production
        units;

3. Another significant and essential cost incurred by
   Entertainment Industry is on food & beverages &
   outdoor catering where such purchase of Goods
   and/or Services are essential component of cost of
   production as it is customary to provide such facilities
   to people connected or incidental during the
   shootings whether within the state where they are
   registered or outside the state whether they are not
   registered which is expressly disallowed u/s 17(5)(b)
   of the Act. Such disallowance increases the cost of
   production of the business unit and hampers the
   working capital of the production as cost incurred is
   huge and absolutely necessary.

4. In the case of many films or serials productions if they
   are not able to do well as well as could not be
   exploited to the extent of Break Even Level (Cost of
   Production= Cost of Recoveries/Revenue Generated)

                                                         16
  and unutilised ITC of GST paid on inputs and input
  services will remain unutilized and may have to be
  expensed out as part of business operations cost.
  Under the present provisions of GST, such unutilised
  credit can't be claimed as refund in the genuine cases.




                 Probable Solutions -ITC

          ITC on Immovable Property Services

1. In respect of Hotel Accommodation services as per
   the provisions of the section 7, Hotel would charge
   only levy of CGST +SGST because such transaction
   would be considered as Intra State transaction in view
   of place of supply of such services even such services
   are availed and utilized by the Service Receiver who
   might be registered in other state which in normal
   circumstances would have attracted levy of IGST. If
   above abnormality is removed then it will help all
   stake holders to reduce the cost of production to the
   extent of admissibility of Input Tax Credit (ITC) in case
   of input services relating to immovable property
   services under the provisions of GST Act.;

2 Similar situations would arise too when temporary
  studio set is constructed for the shooting of movie or
  television serials and/or pre-production expenses are

                                                          17
  incurred by film productions units for doing the Reiki
  of the shoot locations along with entire team of
  production units;

3 Expenses incurred on food & beverages & outdoor
  catering are necessary and customary to provide such
  facilities to people connected or incidental during the
  shootings whether within the state where they are
  registered or outside the state whether they are not
  registered and it has no element of personal benefit
  especially when it is with reference to entertainment
  Industry and such restrictive entry should be
  specifically deleted by providing explanation under
  section 17(5)(b) of the Act or if that is not possible
  Suo motto reversal @5% of such ITC claimed on such
  expenses should be provided under the law.

5. All above expenses are incurred by the industry
   essentially with the intention of absolute necessity
   from the view of furtherance of business/profession
   and/or vocation etc.;

6. In the case of many films or serials productions if they
   are not able to do well as well as could not be
   exploited to the extent of Break Even Level ( Cost of
   Production= Cost of Recoveries/Revenue Generated)
   and unutilised ITC of GST paid on inputs and input
   services should be allowed to be claimed as refund
   u/s 54 of GST Act 2017 and suitable amendment

                                                         18
  should be carried out in the GST law for the same as
  such beneficial move will help them to cut down
  their losses in general subject to detailed verification
  to ensure such claims are genuine as well as
  reasonable.

7. Once above probable solutions are adopted and
   implemented that it will help to reduce the cost of
   production of the business unit as well as it would
   improve working capital of the industry in general;

8. In respect of all Registered Taxable Persons providing
   services as defined under the provisions of GST Law,
   conditions of obtaining separate registrations in each
   state either as regular person or casual taxable person
   etc. should be done away with completely so it
   effectively promotes the ease of doing business in
   India for domestic players as well as international
   players in the business arena;

9. Appropriate authorities can introduce rigorous or
   stringent compliance procedures by formulating
   reporting returns, reports and/or audit reports under
   the provisions of the GST Act 2017 along with non-
   discretionary penalties for any kind of lapses so that
   above the board compliance methodology is
   promoted and augmented against each stakeholders
   of the economy in general.


                                                        19
                          Piracy Issues


Entertainment Industry has been constantly under the fear of
piracy issues either before the release of the movie or after
the release of the movie and if such movie is leaked in the
market before its release, fate of the box collections is
completely destroyed and money spent on production cost
consisting of such movie viz. fees paid to the lead actor and
actresses, supporting actor and actresses, Film Directors,
Cinematographer, Musicians & Composers, Content Writers,
Location Shot Products, Cameraman, Logistic & Ground
Personnel , Sales and Promotion Cost etc. may not be
recovered resulting total loss arising out of such productions.


Typically, such Film Producers covers up their entire cost of
productions based on box collections within two weeks of its
theatrical release. Sometimes such films producer's sale of
their musical rights, overseas rights or satellite rights etc.
prior to release of their films as they don't want to face the
business risk of piracy issues connected with industry.


Piracy issue is not only faced in India by Indian Film Producer
known as "Bollywood" but similar issues are also equally
faced by Foreign Films Producers popularly known as
"Hollywood". At the end of the day it is part and parcel of
business enterprises of the entertainment industry.


                                                             20
Even theatrical business model is under constant threat
because of smart phones with huge storage capacity can
record the entire movie during the show and thereafter it can
be released by using several social networking platforms
instantaneously.
Similar situation arises for Music Industry as song can be
downloaded from one phones to another phone and
thereafter it can be circulated freely for several people which
results into loss of revenue for music industry in general.


People get inclined to promote the piracy because of high
content prices, low income level and cheaper infrastructural
options results into promotion of piracy. For instance,
unlimited data download packages provided by almost all
mobile operators in India are far significantly cheaper as
compared to similar data packages provided in UK.


                 Probable Solutions ­ Piracy


   Government should introduce stringent anti-piracy
  provisions whereby any one found of guilty of such anti-
  piracy should be punished on fast track mode and
  stringent prosecution proceedings with hefty fines
  should be provided for the people indulging in such
  piracy.



                                                             21
 Considering significant costs involved in cost of
 productions movies/serials / theatricals releases/ music
 productions etc. everywhere care should be taken
 obtain insurance cover to protect the bread and butter
 of the productions in whatever form.

 Sovereign should initiate stricter norms for download
and upstream linking of such mixed and unmixed high
resolutions files by introducing significant hackling
unbreakable protocols so that unauthorized access to
any such files is very closely monitored using latest GPS
technology to locate the area of such download as well
as if any disruptions are identified then it can be
immediately detected and prompt actions can be
initiated to protect the damage arising out of such
piracy in general.

 Suitable mechanism should be introduced to track the
upload and download arising out of any kind social
networking websites by using high end encryption to
identity such piracy maniac to safeguard the interest of
entertainment industry.
      Infringement of Intellectual Property Laws


  In the olden era of Entertainment Industry all
  arrangements were done verbally and orally without
  documenting the same in the form of written
  agreement specifying the terms and conditions of any

                                                       22
arrangements which created lot of issues when any
dispute arose amongst all the parties to the contract.
Such disputes were settled amicably within the close
doors without going for formal arbitrations and/or
litigations.

As the industry started getting formalized with changes
in law and with the development of IPR laws viz. Copy
Rights, Trade Marks, Patents etc. to preserve as well as
monetize one's IPR rights by way of exploitations to
derive additional economic inflow from such
entertainment activities. Now almost everything is
documented in the form of duly executed and stamped
agreements so that if any dispute arises then the same
can be produced and challenged in the court of law if
required.

In recent past, "Barfi" movie produced by UTV Motion
Pictures faced significant music due to infringement of
Trade Mark "Murphy" and which was settled by paying
huge some of money out of court.

Similarly, Emami Ltd, listed company sued Arbazz Khan
Productions for using the Zandu baam trade mark in the
famous song "Munni Badnam Hui "in the film "Dabang
"which was again settled out of court by paying the
compensation and Malika Arora khan agreeing to
endorse the brand name.


                                                      23
Similarly, for the infringement of music rights, producer
Rakesh Roshan paid whopping sum of 20 Million as
damages to Ram Sampath who had alleged that the title
song of KRAZZY had been plagiarized from his tunes
which he had composed earlier.

     Probable solutions -infringement of IPR laws

1. It is recommended that water tight legally binding
   agreement should be drafted and executed to ensure
   that any enterprise claiming the rightful, beneficial
   and legal owner of any kind of IPR Rights arising out
   of such contractual arrangements whether expressly
   stated or not enjoys immunity from any kind of
   litigations;

2. Wherever possible from the stage of conception , one
   should register all kinds of idea, story, title, brand
   names, logos, designs, visual rights, scripting rights,
   character looks, acronyms, key words, website rights,
   social networking rights, Individual Personality rights,
   merchandizing rights, animation and graphical rights
   or any kind of visible or invisible rights etc. should be
   registered well in advance under the IPR laws with
   well executed documentation so that it acts as hedge
   against such unwanted litigations arising out of the
   violations of IPR rights;



                                                          24
3. Wherever such rights are acquired from any other
   person then such arrangements of acquisitions shall
   be formally executed, stamped and registered with
   appropriate authorities without any ifs and buts
   though it would result into outflow of funds initially
   but it will protect the pound as well as flash in the
   future;

4. In connection with contractual arrangements for the
   development & creation of such IPRs, preferably Non-
   Disclosure agreements should be executed to protect
   the interest of the concerned parties legally and as
   soon as they are developed and created, the same
   should be immediately registered by drafting
   appropriate legal documents by making all the parties
   connected with such development viz. Owner & ,
   Developer, Creator Cum Confirming Party so that all
   kind of future litigations that can be avoided;

5. There is elite class of professionals who are well
   versed with intricate aspects of every kind of IPR law
   as well as they are familiar with all kinds of litigation
   happening under IPR laws , such persons can provide
   the services of vetting out of the ideas, concepts,
   story line, base line etc. and they opine and confirm
   that they are not plagiarized as well as authenticate
   such resource materials as genuine creation of the
   IPRs their services should be availed so to mitigate
   any kind of probable litigations in general. Their

                                                          25
        authentication can be relied upon but it can't be
        100% authenticate as what kind of issue will come up
        for litigation is very difficult to predict in todays
        scenario.

        Sword of Penal Laws & nascent stage of technology laws
All of us (including Sovereign, Judicial authorities, Ministerial heads
and their teams etc.)        need to accept that this industry is
represented mostly by creative people viz. Directors,
Cinematographers, Musicians, Writers, Lyricists, Dancers, Actors and
Actresses etc. and so on. They are creative brain behind any movie
and ideas generated by them are their brain Childs which can be
generated all of sudden or sometimes it takes ages to formulate such
ideas which take the shape of creative visual and spoken
communication in the form of movie whose predominant intention is
to entertain people rather causing harm to any person or class of
persons in general.


It has been observed and see that provisions of Indian Penal Code
1860 are issued extensively by layman or some class of organizations
under various sections viz.


         Effect on religious sentiments (section 295A)
         Impositions of defamations (Section 499 & 500)
         Sale of Obscene objects or doing obscene acts etc.
         (Section 293 & 294)
With development of technology in every sphere of business
activities several things can be done even when same things are not
done by the person acting in the movie viz. mimicking, voice overs,
image morphing etc.

                                                                     26
  Probable Solutions ­ Penal Laws & Technology laws


1. While handling any kind of legal issues by Sovereign, Judicial
   authorities, Ministerial heads and their teams etc.) either at
   pre-production level or at production level or at post
   production or at the time of release of such movies benefits
   of doubt should be given to brain child ideas of creative
   people as their intention is never to harm anyone under any
   circumstances;

2. It is often said that Penal laws are like double edged swords
   and if it is used effectively and efficiently it can benefit all
   stakeholders and it will generate positive outcome for all
   and

3. if used ineffectively and inefficiently then it would cause
   damages to all stakeholders and it will result into negative
   outcome for all.

4. All people connected with this industry should use all kind of
   technology platforms to convey the real ideas and message
   of the movie conception, pre-production, production, post
   production as well as pre-launch sessions of sales
   promotions and marketing so that misconception about the
   ideas, theme, purpose etc. can be cleared in the mind set of
   all target audience so that no issue legal litigations are faced
   at any juncture in the entertainment sector;






5. Today technology is acting fastest means of communication
   so one should use technology medium very discreetly to
   differentiate between good and bad and all of us are being
                                                                 27
        real time users of technology we should ensure that only
        correct and authenticate information is shared in the public
        domain so that it does not result into miscommunication for
        any stakeholders;

     6. Sovereign needs to improve on the working of cyber laws
        whereby issues are quickly identified as well as they are
        quickly resolved in mutual interests of all stakeholders in
        general.

             Synchronization with other business laws

Very often it has been observed that every business enterprise has to
comply with several laws that are applicable to the unit in direct or
indirect manner. Under each law in the form of compliance, review
or assessments tons of similar information is called for regularly and
repetitively which acts as deterrent to intention of improving of ease
of doing business in India. Some illustrative areas where overlapping
or disconnect is seen is summarized below: -


  1. Definition of Aggregate Turnover under GST Law vis-à-vis
     Turnover as understood generally in Trade community or
     definition of turnover under Income Tax Law or definition of
     turnover under Corporate Law;

  2. Reporting of GST Turnover under the provisions of Income Tax
     Act 1961 while filing Income Tax Returns? Under GST person
     can have multiple registration either in the same state because
     of separate locations or independent business verticals or it can
     have several branches all over the India whereas under Income
     Tax law he would file only one income tax returns based its

                                                                    28
  PAN Number? Thus, question arises which GST turnover should
  be reported while filing Income Tax Return by the registered
  Taxable person;

3. Multiple GST audit report based on each GST registration
   number whereas under Income Tax Law and/or Corporate Law
   it needs to have only one consolidated audit report?

4. Definition of Work Contract Services under GST Law vis-à-vis as
   understood by general Trade Parlance Theory by common
   layman;

5. Maintenance of books of accounts under GST Law is necessary
   vis-à-vis exemption granted under income tax law for the
   presumption system of taxation u/s 44AB or u/s 44AD or u/s
   44ADA or u/s 44AE of the Income Tax Act 1961;

6. Compliance due dates under GST law for each registration
   clashing with other due dates specified under several laws;

7. Turnover based waiver notification for the quoting of HSN Code
   under GST law whereas under GST law provisions in respect of
   e way bills it is mandatory to quote HSN Code when value of
   movement of goods exceeds Rs.50000;

8. Levy of GST on related persons transactions especially
   transactions between Principal/ Agent and Employer/
   Employee relationship which will create tons of litigations in
   future which if they are synced with other laws that are
   applicable to any business enterprise it will open up pandora
   box of litigations for every business enterprises vis-à-vis Related
   Party transactions as understood under Income Tax Law or


                                                                    29
     Corporate Law or as per Accounting Standards notified by the
     ICAI.

  9. Under GST laws certain transactions are considered as
     expressly disallowable in the hands of Registered Taxable
     Person (RTP) for the purpose of ITC claim admissible as per the
     provisions of section 17 of CGST Act 2017 whereas same
     expenses are claimed as eligible business expenditure without
     any disallowance under the provisions of the Income Tax Act
     1961;

  10.     Transactions within the state/union territory would
    attract dual structure of taxes viz. CGST +SGST/UTGST whereas
    transactions outside the state/union territory would attract
    IGST? Why to have such different rate structure as such
    multiple rate structure with different rates of taxes creates
    confusion amongst all stakeholders?

  11.     Under GST law, under several circumstances ITC reversals
    has been provided under Rule 42, Rule 43 & Rule 44 of CGST
    Rules depending on nature of transactions and consequently
    effect of such reversals while drawing up general financial
    statements under other laws is not integrated at all?


To improve the effectiveness of compliance, uniform reporting of
transactions, uniform tax treatment of all such transactions and to
improve the ease of doing business in India, following measures
should be adopted: -


  1. Definition of Turnover under every law as applicable to any
     business enterprise should be aligned so that there are no ifs

                                                                  30
  and buts while reporting of the turnover transaction value
  under any law; Turnover shall only refer to the transactions of
  outward supplies (including Exempt and Non-Taxable Supply)

2. It should be provided under each law, turnover shall always
   mean to exclude any kind of taxes collected by the enterprise
   are on behalf of Sovereign and such taxes collected can never
   form part of any enterprises revenue account;

3. GST Audit limits of Rs.2 Crores should be introduced based on
   consolidated turnover on PAN India basis and even there
   should be only GST Audit report for each registered person
   based on PAN Number so that Financial statements are
   reconciled in more effective manner when compared to any
   other laws that are applicable to any business enterprises;

4. If the definition GST Turnover is aligned to all other business
   laws that are applicable to any business enterprises then issue
   of variance in reporting of GST Turnover would effectively get
   reduced but it won't be resolved completely;

5. Definition of Work Contract Services under GST Law should be
   aligned with reference to general Trade Parlance Theory as
   understood by common layman;

6. Maintenance of books of accounts under GST Law should be
   aligned vis-à-vis exemption granted under income tax law for
   the presumption system of taxation u/s 44AB or u/s 44AD or
   u/s 44ADA or u/s 44AE of the Income Tax Act 1961;

7. Compliance due dates under GST law should be aligned to
   other due dates specified under several laws so that it reduces
   the burden of compliance on any business enterprises;
                                                                31
8. Turnover based waiver notification for the quoting of HSN Code
   under GST law should be corelated with other provisions of GST
   law so that it is looked upon as all provisions are synced to each
   other;

9. Transaction reporting in respect of Related persons
   transactions should be aligned to definitions provided under
   Income Tax Law or Corporate Law or as per Accounting
   Standards notified by the ICAI and transactions between
   Principal/ Agent and Employer/ Employee relationship should
   only be considered for disclosure purpose under GST Audit but
   same shall not be added to GST Turnover to avoid any kind of
   reconciliation issues in general which will reduce litigations;

10.     Transactions to be considered as expressly disallowable
  in the hands of Registered Taxable Person (RTP) for the
  purpose of ITC claim admissible as per the provisions of section
  17 of CGST Act 2017 should be rationalized in line with other
  revenue laws applicable to the enterprise in general. Thus, if
  any expenses are considered as admissible as business
  expenditure under Income Tax Law than correspondingly even
  ITC on such expenses should be admissible under the provisions
  of GST Act 2017;

11.     Sovereign should promote only one kind of tax viz. GST so
  that issue arising on account of bifurcation of taxes like CGST,
  SGST, UTGST, IGST, Cess etc. is completely discarded so that
  compliance becomes simple and straight forward for all the
  stakeholders in general;

12.    Under GST law, instances where ITC reversals has been
  provided should be completely discarded as Sovereign has
                                                                   32
     already recovered the levy of taxes at the first instance itself as
     per multiple chain of trade and even if such reversals is
     discarded it won't have any material and significant effect on
     the revenue collections of the Government because when such
     value considered on macro levels it will work out to miniscule
     value as compared to long term benefits that will accrue to
     government at large.


                             Conclusion
According to information available in the public domain,
Entertainment Industry is expected touch market valuation
62.2 billion by 2025 in India which itself indicates that if some
apparent issues & probable solutions as discussed above this
industry can create significantly to the GDP of the economy &
it can provide employment to all age groups in the country in
general.


Considering the extended or ancillary or incidental industry
connected with Entertainment Industry and its positive
impact in generating review when looked upon at the
broader level this industry requires apt consideration to
address its apparent issues as it can contribute effectively in
absolute value terms as well as it can act key changer in the
entertainment with interlinking of each activities which can
spread the message joy, happiness , moral values , creative
ideas and at the time it can provide soothing effect of music ,
fun and peace to ever increasing stressful situations of life in
general.

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To conclude I would like to emphasis, in the initial stages of
this industry, our stakeholders use to copy the concept from
Hollywood but now a day's things have changed even
Hollywood is influenced by the Bollywood and our Bollywood
contribution is recognized at the International level by
several actors are asked to work in the Hollywood films and
at the same time Indian movies are leaving their marks on
the sands of Global Entertainment Industry.




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