Question ID :
40623
TDS on sale and distribution of films
Sale and distribution of films now included under royalty and hence TDS would be applicable. But the rate( 2% or 10%) is not clear after the amendment to Finance act 2020. Please refer below
As per the Finanace Act 2020,
In section 194J of the Income-tax Act, in sub-section (1),––
(a) in the long line, for the words “ten per cent. of such sum”, the words and
brackets “two per cent. of such sum in case of fees for technical services (not being a
professional services, or royalty where such royalty is in the nature of consideration for
sale, distribution or exhibition of cinematographic films and ten per cent. of such sum in
other cases,” shall be substituted;
So TDS for sale and distribution of films is now 2% or 10%. Please clarify
Posted by
T.R.S. PATHY SENTHIL
on
Apr 10, 2020
Filed Under
TDS/TCS
Explanation 2 to clause (vi) of sub-section (1) of section 9, provides the the definition of Royalty. Now this defination specifically excludes the Films distributor. Hence they are not covered under royalty.
Are they covered under professional services. Answer is no because professional services notified u/s 44AA. Under that section film artists are notified but not the film distributor.
Are the film distributors are the Director of the company producing the film, if yes, any remuneration paid to directors will be taxed at 10%.
Looking at all these situation, film distributor qualify for the Technical services, and hence 2% TDS should be charged, unless the film distributor is the director of the company producing the film.
Posted by
CA Yogesh Kumar on
May 02, 2020