regional training institute, ranchi
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Regional Training Institute, Ranchi. Structured Training Courseware on State Receipts Audit Audit of Entertainment Tax Receipts. Session Objectives. At the end of these sessions, the participants will be able to Explain the nature of entertainment tax receipts - PowerPoint PPT PresentationTRANSCRIPT
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Regional Training Regional Training Institute, RanchiInstitute, RanchiRegional Training Regional Training Institute, RanchiInstitute, Ranchi
Structured Training Structured Training Courseware on State Receipts Courseware on State Receipts
AuditAudit
Audit of Entertainment Tax Audit of Entertainment Tax ReceiptsReceipts
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Session ObjectivesAt the end of these sessions, the
participants will be able to • Explain the nature of entertainment tax
receipts• Understand the assessment and
collection mechanism and• List the audit checks relating to
entertainment tax receipts
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Background• Government of India Act 1935
– States empowered to levy tax on payments for admission to all entertainment
– Registered Proprietor of an entertainment to pay such tax
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Organizational Set up• Commissioner Commercial Taxes
– Responsible for administration of relevant Acts and Rules at apex level
• Sr.Joint Commissioner, Dy. Commr and Asst. Commr at Headquarters
• Divisions – headed by Joint Commr• Circles – headed by CTO
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Nature of Entertainment Tax Receipts
Entertainment includes• Cinemas• Commercial video shows• Dish antennae• Cable connections of TVs• Exhibitions
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Nature of Entertainment Tax Receipts (contd.)
• Races• Games and sports• Use of loudspeakers• Performance and• Amusements
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General Exemptions• If entire proceeds devoted to
philanthropic, religious or charitable purposes
• If entertainment is of wholly educational character
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General Exemptions• If entertainment provided by
institution not established for profit• By non-profit institution consisting
solely of exhibition of articles related to public health, or agriculture or manufacturing industry
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Special Exemptions• Drama• Kavi sammelan and Mushaira• Dangal and kushti• Flower show• Magic show• Puppet show• Sports• Qawwali
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Special Exemptions• Entertainment in Fair• New cinema house where there is
less than 1 lakh population• Military personnel in uniform• Personnel of BSF
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Registration• Every proprietor of entertainment
needs a registration– Violation to be penalized
• Duplicate registration certificate can be obtained
• If business is changed/discontinued, registration can be cancelled
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Security Deposit• Proprietor of entertainment to deposit
security with prescribed authority– Amount not to exceed total entertainment
tax chargeable for fortnight– Amount to be forfeited if returns not
furnished on due date– Amount can be adjusted against
dues/arrears
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Details of Entertainment
Proprietor should inform prescribed authority about– Place of entertainment– Nature of entertainment– Commencement and termination timings– Changes or modifications to timings of
entertainment
At least 44 hours in advance
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PenaltyProprietor is liable for payment of
penalty in the following cases:• Admits a person to entertainment in
contravention of the Act• Fails to pay tax dues within the
timeframe prescribed• Fraudulently evades payment of tax
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Penalty (contd.)• Obstructs an officer from carrying
out inspection, search or seizure• Fails to produce records
demanded by Inspecting Officer• Contravenes any other provisions
of the Act
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Procedure for Assessment
• Tax is levied on all payments for admission to any entertainment
• Liability rests with proprietor of entertainment
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Procedure for Assessment (contd.)
• State Government can permit a proprietor to pay the tax in the following manner– Compounding the tax for a fixed sum or– Consolidated payment at a percentage of
gross proceeds or– On the basis of a mechanical device that
registers persons admitted to entertainment automatically
– For cinematograph exhibition, a show tax is levied in addition to entertainment tax
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Consolidated Payment of Tax
• Tax not exceeding 45% and not less than 10% of gross collection capacity per show
• Percentage fixed as per classification of places based on population census
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Compounding of Tax• Tax based on fixed percentage of
gross collection capacity– For a specified number of shows– In a specified period– Not less than average amount of tax
payable for preceding 3 years
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Mode of PaymentEntertainment tax can be paid in any of
the following ways:• By stamping ticket indicating amount of
tax• By calculating persons admitted• By way of compounding tax• By consolidated payment of tax• By using a mechanical device to
register automatically
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AppealAppeal against an assessment order• To be filed within 45 days of receipt of
demand notice• To be sent to authorised Joint
Commissioner / Deputy Commissioner• Appellant to be given reasonable
opportunity to be heard– No order can be passed without hearing
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RevisionApplication for revision of order• To be filed within 30 days of
communication of order• To be sent to Joint Commissioner
– If passed by a person lower than him in rank or else, to the Commissioner
– Commissioner can also revise an order on his own, if passed by his subordinate
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Review• Review to be within 12 months
after date of passing order– Commissioner can permit review
after the expiry of this period
• No Officer can review orders passed by predecessors except with approval of Commissioner
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RefundRevenue realized can be refunded in the
following cases:• Where net proceeds of entertainment
are devoted to philanthropies, charitable or religious purposes
• Where the prescribed authority feels tax is charged in excess of dues
• Where show is cancelled and spectators are refunded their money
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Important Registers & Records
• Entertainment Act does not prescribe maintenance of registers/records– Registers prescribed for Sales Tax
department are maintained• To keep track of individual assessments
and collections
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Important Registers & Records (contd.)
Registers• Application for Registration• Cancellation of Registration
Certificate• Application for Amendment• Register of Registered dealers
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Important Registers & Records (contd.)
• Demand and Collection Register• Disposal of offences Register• Progressive Collection Register• Refund Register• Registers relating to requisitions
from Appellate Officers
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Important Registers & Records (contd.)
• Register of Securities• Seized books of accounts and
disposal• Inspection of non-registered
dealers
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Audit Checks• Whether there is an effective
system to ensure all returns due from proprietors are received on time
• Whether correctness of returns checked?
• Whether action taken for non-filing\delays in filing returns
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Audit Checks (contd.)• Check if tax is charged correctly• See if number of shows have been
correctly calculated• Whether entertainment tax and
show tax paid by proprietor, were remitted in the treasury
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Audit Checks (contd.)• Compare opening number of
regular tickets, complimentary passes, and concession tickets issued as per return, with closing balance of previous week\fortnight
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Audit Checks (contd.)• Verify the correctness of stamps
used for each demonstration• See if treasury challans have been
maintained properly• Check if there is a system of
reconciliation between tax received and treasury records
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Audit Checks (contd.)• Whether security furnished by
proprietor is sufficient and whether related records are maintained properly
• Whether arrears of tax recovered from security
• Whether orders of exemption, refunds and remission conform to relevant rules
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Audit Checks (contd.)• Whether proprietors violating rules
were punished?• Whether guidelines relating to checking
evasion of taxes followed properly by assessing authorities
• Scrutinize the income-tax returns of proprietors if there is prima-facie doubt about returns on entertainment