Bollywood stars under scanner for service tax payment discrepancies

In the Comptroller and Auditor General report tabled in the Parliament on Friday, as many as 156 cases of non-compliance of rules and short payment of service tax with revenue implication exceeding Rs. 50 crore have been detected.

Amongst the 156 defaulters, feature a number of Bollywood stars including Salman Khan, Ajay Devgn, Ranbir Kapoor, Riteish Deshmukh and Arjun Rampal.

“During the examination of records of Khan, Rampal, Deshmukh and Devgn, we observed from the agreements between producer and actors that the producers, being service recipients, agreed to provide for and bear expenses relating to arrangement of the services for travel, lodging and boarding of the make-up artist, hair stylist and spot boy,” the CAG report said. The value of this additional consideration was not included in taxable value of the assessees.

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Elaborating the report, the CAG noted that in case of Ranbir Kapoor, “We noticed two instances where for the same film shot in India and abroad, the payment for the portion shot abroad was arranged from foreign companies, thereby the service was made to look as export of service with no tax liability.”

The report further added, “Kapoor acted in the movie ‘Ae Dil Hai Mushkil’ produced by Dharma Productions Pvt Ltd, shot both in India and New York. He received a consideration of Rs 6.75 crore from a foreign company, ADHM Films Ltd. (UK), based in London for the film shot in UK and did not pay service tax of Rs 83.43 lakh treating the same as export of services.”

While show-cause notices have been sent to actors like Rampal, Devgn and Deshmukh, the department has not clarified whether any action has been initiated against Salman Khan for short payment of service tax.

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