Public Accounts Committee: Update System to Combat Tax Evasion in Entertainment, Public Accounts Committee Tells IT

A Parliamentary Commission has asked the Department of Income Tax to continually update its mechanism to crack down on tax evasion in the fast-growing entertainment sector. In the recent past, this sector has expanded with new segments such as OTT, podcasts, audiobooks, and games, in addition to traditional modes such as TV, radio, movies, music, and sports.

Public Accounts Committee (PAC) opined that rising wealth and changing lifestyles have contributed to the transformation of the Indian entertainment industry into an emerging sector of the economy with high potential for income generation.

The 51st Report of the Entertainment Employee Evaluation Committee was presented in parliament on Wednesday.

He noted that the dynamic nature of the industry creates the challenge of balancing the growth of new sectors, namely ensuring that tax revenues increase accordingly with increasing income sources.

“Given these aspects, the committee recommended, in order to curb tax evasion, to establish a mechanism to constantly review the possible sources of income generated in this sector and update systems to keep pace with modern developments in the entertainment sector,” the report says.

While appreciating the initiatives taken by the Treasury Department, the GAC highlighted the need for fine-tuning of electronic systems, coupled with efforts to streamline the business codes used for income tax returns (engineers) forms, improving the information exchange mechanism and strengthening the monitoring mechanism.

Commission chaired by senior Congress leader Adhir Ranjan Chowdhuryalso suggested that efforts should be made to maintain contact with district administrations and other state bodies dealing with economic offenses in order to ensure a smooth exchange of data with the income tax department.

“This, in the opinion of the committee, will further improve the database of appraised/offenders and help cross-check the figures disclosed by them during the evaluation process,” the report says.

The group also stated that Central Board of Direct Taxes (CBDT) must constantly monitor the growing number of high-risk cases in new and emerging segments of the entertainment sector – augmented and virtual reality, social video, cloud gaming and podcasting.