Income Tax 2025

Appearance

Submission of statements by producers of cinematograph films or persons engaged in specified activity. ​

507(1) ​

Any person carrying on the production of a cinematograph film or engaged in any specified activity, or both, during the whole or any part of any tax year shall, furnish within such period, a statement in such form and in such manner, as prescribed, to the prescribed income-tax authority.

507(2) ​

The statement referred in sub-section (1) shall contain particulars of all payments of over fifty thousand rupees in the aggregate made by him or due from him to each such person as is engaged by him in such production or specified activity.

507(3) ​

In this section, “specified activity” means any event management, documentary production, production of programmes for telecasting on television or over the top platforms or any other similar platform, sports event management, other performing arts or any other activity as the Central Government may, by notification, specify.

Explanation

Section Summary: ​

Section 507 of the new income tax law requires individuals or entities involved in the production of cinematograph films or specified activities (such as event management, documentary production, TV/OTT program production, sports event management, etc.) to submit a detailed statement to the prescribed income-tax authority. This statement must include details of payments exceeding ₹50,000 made or due to individuals engaged in these activities. The purpose is to ensure transparency and compliance in financial transactions related to these industries.

Key Changes: ​

  1. New Reporting Requirement: This section introduces a mandatory reporting requirement for producers and individuals engaged in specified activities, which was not explicitly outlined in the prior income tax laws.
  2. Expanded Scope of "Specified Activities": The definition of "specified activities" now includes a broader range of activities, such as event management, documentary production, TV/OTT program production, sports event management, and other performing arts. The Central Government can also add more activities through notifications.
  3. Threshold for Reporting: Payments exceeding ₹50,000 in aggregate to any individual must be reported, ensuring detailed tracking of significant financial transactions.

Practical Implications: ​

  1. For Film Producers and Specified Activity Professionals: They must maintain detailed records of payments made or due to individuals engaged in their projects. This increases compliance obligations and administrative work.
  2. For Tax Authorities: The provision enhances transparency and helps track income generated in these industries, reducing the risk of tax evasion.
  3. For Individuals Receiving Payments: Those receiving payments from producers or specified activity professionals may face increased scrutiny, as their income details will be reported to tax authorities.

Critical Concepts: ​

  1. Specified Activity: Defined as activities like event management, documentary production, TV/OTT program production, sports event management, performing arts, and any other activity notified by the Central Government.
  2. Aggregate Payments: The ₹50,000 threshold applies to the total payments made or due to a single individual during the tax year, not per transaction.
  3. Prescribed Authority: The specific income-tax authority to whom the statement must be submitted will be defined by the government in the rules or notifications.

Compliance Steps: ​

  1. Maintain Records: Producers and professionals must maintain detailed records of all payments made or due to individuals engaged in their projects.
  2. Prepare Statement: Compile a statement containing details of payments exceeding ₹50,000 in aggregate to each individual.
  3. Submit Statement: File the statement within the prescribed period and in the prescribed format to the designated income-tax authority.
  4. Monitor Notifications: Stay updated on any new activities added to the "specified activities" list by the Central Government.

Examples: ​

  1. Film Production Scenario: A film producer pays ₹30,000 to a scriptwriter in January and ₹25,000 in March. Since the aggregate payment exceeds ₹50,000, the producer must include these payments in the statement submitted to the tax authority.
  2. Event Management Scenario: An event management company hires a decorator for multiple events, paying ₹20,000 in April, ₹15,000 in June, and ₹20,000 in September. The total payment of ₹55,000 must be reported in the statement.

This section ensures that high-value transactions in the film and entertainment industries are tracked, promoting greater compliance and transparency.