Bollywood celebrities under tax scanner for alleged GST evasion: Report
Three Bollywood stars have allegedly come on the radar of the income tax department for not divulging complete details of their brand endorsements to dodge paying Goods and Services Tax (GST).
The brand endorsements attract 18 per cent GST and endorsers are supposed to charge the brand/company concerned and submit it to the tax authorities if the money they get is above the GST limit, which is Rs 20 lakh annually.
According to a report in the Business Standard, the names of Bollywood celebrities surfaced during the Central Board of Indirect Taxes and Customs (CBIC) investigation into online gaming and fantasy sports companies.
The financial daily quoted an anonymous official, privy to the development, as saying, “These celebrities were supposed to raise invoices against the remuneration charging GST … Instead, they acknowledge the amount received as ‘celebrity sponsorship services’ to the recipient under the reverse charge mechanism of GST.”
Under reverse charge, the obligation to pay tax is on the company and not on service providers (celebrities). However, such a mechanism is applicable only to selected services such as advocacy, sponsorship.
The CBIC is scrutinising the matter and notice is likely to be issued soon for not disclosing the amount.
“Endorsement by actors and celebrities does not qualify as ‘sponsorship’ but many of them are misusing the reverse charge technique as a loophole to evade taxes,” another official told the daily.
The official pointed out that the responsibility of paying the tax lies with the endorsers, the company concerned never claimed inputs nor mentioned it in its account, leading to a loss of revenue.
The indirect tax authorities are believed to have checked with several entities, especially online gaming companies and fantasy sports, which have dealt with film actors and sports personalities for marketing.
