TDS on sale and distribution of FIlms

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The Finance Act 2020 has brought the sale and distribution of films under the purview of royalty, making Tax Deducted at Source (TDS) applicable. However, there's ambiguity regarding whether the TDS rate should be 2% or 10%. The amendment to Section 194J suggests a 2% rate for royalties related to the sale, distribution, or exhibition of cinematographic films, but further clarification is needed to confirm its application.

Shakthi

Shakthi

(Querist)

10 April 2020 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 distrubtion of films is now 2% or 10%. Please clarify

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

10 April 2020 Fee for technical services or royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic films : TDS Rate 2% (w e f 01-04-2020)

Shakthi

Shakthi

(Querist)

10 April 2020 sir please check the amendment. It says not being a professional royalty where such royalty is on sale of films

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