Bollywood actors will be levied service tax, hospitals exempted

NEW DELHI: All Bollywood actors and those performing in television serials will be charged 12% service tax from July 1, 2012 on their earnings from acting assignments and endorsements. This will be in addition to their income tax obligations.

The government has from July 1 embraced new taxation of services by introducing a negative list. Any service out of this list or out of the exempted list of services (which may be changed from time to time) will be charged service tax. But if an individual or a firm has an annual income of less than Rs 10 lakh, the service provider can avail exemption and shall not be obliged to pay any tax.

Indian Premier League cricketers and event managers were already brought under this tax regime as the government had clarified earlier that only recognized format of sports activities are exempted from this levy.

The government has kept 38 services in the negative list, including transport of goods or passengers, metered taxis, auto rickshaws, electricity transmission or distribution by discoms, betting, gambling, entry to amusement parks and burial services.

The educational guidelines released by the finance minister last month clarifies that all private constructions activities are to be levied service tax, including construction of private hospitals and educational institutions. Only government hospitals and educational institutions and government buildings meant for official purposes are exempted from this levy.

Performing artists in folk or classical art forms of music, dance, or theatre have, however, been kept out of this levy and will not be subjected to service tax. "All other activities by an artist in other art forms such as western music or dance, modern theatres, performance of actors in films or television serials would be taxable," the government paper said. Similarly, activities of artists in still art forms e.g. painting, sculpture making etc. are taxable. Services provided by an artist as brand ambassador is also taxable.

Those in the exempted list also include ones having copyright relating to original work of composing song. Similarly, an author having copy right of a book written by him would not be required to pay service tax on royalty amount received from the publisher for publishing the book. A person having the copyright of a cinematographic film would also not be required to pay the levy on the amount received from the film exhibitors for exhibiting the cinematographic film in theatres.