Film stars use foreign income exemptions as tax shield

MUMBAI, SEPT 29: Tuesdayâ€™s Income Tax raids on Bollywood personalities has revealed prima facie evidence of the misuse ...

MUMBAI, SEPT 29: Tuesdayâ€™s Income Tax raids on Bollywood personalities has revealed prima facie evidence of the misuse of section 80 RR of the Income Tax Act by many artists. The section gives exemptions to artists and other categories of professionals like sportsmen on the professional income earned abroad and remitted to India. Under section 80 RR musicians and artists get a 75 per cent exemption.

Sources in Income Tax told ENS that the documents recovered on Tuesday and Wednesday from the premises of the actors and filmmakers revealed that foreign performances had been used to show income earned in India as professional fees earned abroad. A detailed investigation is being conducted.

The documents seized by the investigation wing of I-T have also revealed major investments in business ventures and real estate, a sources said.

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The estimated total escapement of income likely to be revealed in the case of the nine personalities raided may be in the region of Rs 35-40 crore, sources said.

In the case of a leading filmmaker, the `overflow’ (the amounts left after the profits and cost of a flim are set off) on a particularly successful film was shown as Rs 12 cr while I-T sleuths have reason to believe, from the papers seized, that it was in the region of Rs 30 cr.

Post-dated cheques of a huge amount were found at the office premises of one of the assessees searched on Tuesday indicating huge sums lent to the leading lights of Mumbai’s filmdom.

Several foreign accounts are under scrutiny, sources said.

The department had conducted searches on 33 premises including those of Aishwarya Rai, Urmila Matondkar, Rani Mukherjee, Salman Khan, Yash Chopra, Yash Johar and Karan Johar and chartered accountants Anil and Ajay Sikri. G G PhotoFilms, a major dealer in raw stock, was also searched.