A parliamentary panel has called on the income tax department to continuously update its mechanism to tackle tax evasion in the growing entertainment industry.
In the recent past, the industry has expanded into new segments like OTT, Podcasts, Audiobooks and Games apart from traditional modes like TV, Radio, Movies, Music and Sports .
The Public Accounts Committee (PAC) has found that rising wealth and changing lifestyles have helped turn India’s entertainment industry into a nascent sector for the economy, with high generation potential. increased income.
The 51st report of the commission “Assessment of persons assessed in the entertainment sector” was tabled in Parliament on July 21, 2022.
He noted that the dynamic nature of the industry poses the challenge of maintaining a balance in the growth of new sectors, i.e. ensuring that tax revenues are increased accordingly with increased sources. of income.
“Considering these aspects, the committee recommended that, in order to combat tax evasion, a mechanism be put in place for the continuous examination of possible sources of income generated in the sector and to update the systems in order to follow the pace of contemporary developments taking place in the entertainment industry,” the report states.
While appreciating the initiatives taken by the Ministry of Finance, the PAC stressed the need to refine the electronic systems coupled with efforts to rationalize the business codes used for the tax declaration forms (ITR), to refine information sharing mechanism and strengthen the monitoring mechanism. .
The panel, chaired by senior congressional official Adhir Ranjan Chowdhury, suggested that efforts also be made to liaise with district administrations and other government agencies involved in economic crimes to enable a transparent exchange of data with the income tax department.
“This, according to the committee, will further improve the assessee/offender database and assist in the cross-checking of figures disclosed by them during the assessment process,” the report said.
The panel also said that the Central Board of Direct Taxes (CBDT) should continuously monitor the growing number of high-risk assessment cases in new and emerging segments of the entertainment industry – augmented and virtual reality, social videos , cloud games. , and podcasting.