Karan Johar and Ekta Kapoor's production companies among 7 to come under IT scanner

The Income Tax department conducted a survey last week of all the production houses regarding the taxation on 'extras' in films, those who we see in the background. This has been an ongoing discussion between the tax department and Bollywood production houses.

As 7 companies come under the Income Tax department's radar, Karan Johar's Dharma Productions and Ekta Kapoor's Balaji Telefilms also find themselves in the mix. The issue centres on TDS charged on wages for extras in films, which producers have been charging at 2%, but, the limit set by the department has been 10% which is not being followed.

Dharma, Balaji and 5 others examined by the Income Tax department

Often we underestimate the value of an extra in a film, who actually make up the background and set a scene. But, remuneration in the case of extras has now become a pressing issue for producers in the industry. In light of the current taxation policies, the Income Tax department conducted a survey of 7 companies- Karan Johar's Dharma Productions, Ekta Kapoor's Balaji Telefilms, Ritesh Sidwani-Farhan Akhtar owned Excel Entertainment, Vashu Bhagnani's Pooja Entertainment, Dinesh Vijan's Maddock Films, Luv Ranjan's Luv Films, and Ajay Rai's Jar Pictures.

The report from the survey said that extras are not being charged a TDS (Tax Deducted at Source) of 10%, and are instead being charged 2%. The 10% TDS has been applicable for 4 decades now. However, even actors and celebrities are charged 10% as they come under the category of 'skilled artistes'. Often extras are not considered 'skilled' being referred to in Hollywood as 'human props', but to the income tax officials, their appearance on screen however short, amounts to skill. 

Producers in a tight spot 

While verification raids we're conducted, details weren't shared and a decision on the matter is yet to be taken. Other differences between the department and the producers are related to the TDS that needs to be charged on rentals and equipment hired.

None of the named Bollywood production companies has commented on the issue. The names being cited are some of the biggest in the industry, as Karan Johar's Dharma had made a turnover of nearly INR 500 crores in 2019. Close on their heels is Balaji with  460 crores.