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Tamil Nadu’s Income Tax Department conducts raids on film producers, distributors

The Central Board of Direct Taxes (CBDT) stated on Saturday that the Income Tax Department had conducted searches at 40 locations in Chennai, Madurai, Coimbatore, and Vellore that belong to certain producers, distributors, and financiers connected to the film industry. On August 2, 2022, search and seizure actions were conducted.


Several damning documents, digital data, and other items connected to reported cash transactions and investments have been seized during the search operations. The CBDT said in a statement that during the search, secret and hidden premises had also been found.


The search effort has so far led to the discovery of unreported income worth more than Rs 200 crore. Unaccounted gold jewellery worth more than Rs 3 crore and undisclosed cash over Rs 26 crore have both been seized. The CBDT stated that more investigations are being conducted.


Documents like promissory notes and others linked to unaccounted cash loans that were made to various film production houses and others have been found during searches in the cases of film financiers.


As the actual amounts generated from the release of the films are much higher than the amounts shown in the regular books of account, evidence points to tax evasion in the cases of film production companies. They use the unaccounted wealth they have created in this way to fund both secret investments and payments.


Similar evidence has been found in cases involving movie distributors, which points to the collection of unreported funds from the theatres. According to the evidence, the distributors organised into syndicates and systematically lowered theatre collections, which in turn suppressed actual income, according to the CBDT.




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