The Income Tax (I-T) Department is investigating over a dozen event management companies suspected of evasion through underreporting and incorrect declaration of income from overseas performances, as well as cash payments to vendors and contractors beyond the prescribed limit to escape the tax net, said people with knowledge of the matter.
Celebrities who have worked with these companies are also under scrutiny as the tax department has detected discrepancies in fees and payments, ET has learnt. These pertain to those organising musical events, high-profile weddings, ticketed stand-up comedy shows and overseas performances of artistes.
“There is rampant underreporting of income by event management companies. We are closely monitoring the income declared by them, along with the actual payment made and expenditure by companies,” a senior official told ET.
Authorities have been investigating tax evasion by event organisers since December 2023 and have conducted searches and sent notices to 11 companies so far. The companies are said to have managed events that cost more than ₹40 crore each. The department has been expanding the scope of investigation, bringing more companies into the ambit and may soon send notices to them as well. “There will be more follow-up questioning,” the official said.
‘Long Chain of Evasion’
The official refused to divulge names as investigations are underway and popular figures are allegedly involved.
In many cases, the event management companies are also not deducting tax at source (TDS) for payments to contractors and some artistes. Under the Income Tax Act, 1961, any payment made to an event management company for services rendered is subject to TDS under Sections 194C or 194J.
Event management companies must deduct TDS from payments made to contractors, vendors, or freelancers, and remit it.
One official cited an instance: A singer at a wedding in Goa declared a fee of Rs 3.5 crore, while the event management company declared a payment of Rs 9 crore to the performer. The couple who hired the company declared a payment of Rs 9 crore for the entire event. The Income Tax Department has sent notices to all three parties.
“This is just one example of discrepancies in payment. There is a long chain of evasion on all levels — from organisers to vendors,” said the official, adding that a large portion of payments is being made in cash, which escapes the tax net.
The official added that many of these companies don’t have goods and services tax (GST) registration and GST officials are looking separately into the matter. All companies, including event managers, that engage in the supply of goods or services with an annual turnover exceeding Rs 40 lakh are required to register for GST.
Celebrities who have worked with these companies are also under scrutiny as the tax department has detected discrepancies in fees and payments, ET has learnt. These pertain to those organising musical events, high-profile weddings, ticketed stand-up comedy shows and overseas performances of artistes.
“There is rampant underreporting of income by event management companies. We are closely monitoring the income declared by them, along with the actual payment made and expenditure by companies,” a senior official told ET.
Authorities have been investigating tax evasion by event organisers since December 2023 and have conducted searches and sent notices to 11 companies so far. The companies are said to have managed events that cost more than ₹40 crore each. The department has been expanding the scope of investigation, bringing more companies into the ambit and may soon send notices to them as well. “There will be more follow-up questioning,” the official said.
‘Long Chain of Evasion’
The official refused to divulge names as investigations are underway and popular figures are allegedly involved.
In many cases, the event management companies are also not deducting tax at source (TDS) for payments to contractors and some artistes. Under the Income Tax Act, 1961, any payment made to an event management company for services rendered is subject to TDS under Sections 194C or 194J.
Event management companies must deduct TDS from payments made to contractors, vendors, or freelancers, and remit it.
One official cited an instance: A singer at a wedding in Goa declared a fee of Rs 3.5 crore, while the event management company declared a payment of Rs 9 crore to the performer. The couple who hired the company declared a payment of Rs 9 crore for the entire event. The Income Tax Department has sent notices to all three parties.
“This is just one example of discrepancies in payment. There is a long chain of evasion on all levels — from organisers to vendors,” said the official, adding that a large portion of payments is being made in cash, which escapes the tax net.
The official added that many of these companies don’t have goods and services tax (GST) registration and GST officials are looking separately into the matter. All companies, including event managers, that engage in the supply of goods or services with an annual turnover exceeding Rs 40 lakh are required to register for GST.
