Script writing services refers to businesses that provide writing and development of scripts for movies, television shows, plays and other entertainment mediums. Professionals in these services aid directors, producers and production houses in conceiving storylines, characters and dialogue for various audiovisual mediums. As the script forms the foundation of any screen production, script writing services play a critical role in the creative process.
With the growth of the entertainment industry in India, the demand for quality script writers has increased exponentially in recent years. Several professional script writing firms have come up to offer specialized services to meet this growing need. Like any other service business, script writing services are also liable to pay Goods and Services Tax or GST.
GST on script writing services
Under the Indian GST regime, script writing services come under the umbrella of ‘Intellectual Property Services’. As per the GST tax slabs, intellectual property services attract a tax rate of 18%.
While developing scripts or providing other writing services, script writers may charge a consolidated fee from their clients. On this fee earned from script writing jobs, script writers are expected to charge and deposit GST at 18%.
For example, if a script writer charges Rs. 1 lakh for developing the screenplay of a upcoming film, they would need to charge Rs. 18,000 as GST over and above the script fee. This GST amount then needs to deposited with the government by the due date.
GST registration and compliance
Script writers or script writing firms are required to obtain GST registration if their annual turnover exceeds the GST threshold limit of Rs. 40 lakhs. Once registered, they need to follow the regular GST compliance procedures like:
Issuing tax invoices for all script jobs
Filing GSTR-1 return detailing outward supplies
Depositing the collected GST amount in GST returns
Filing GSTR-3B monthly/quarterly return
Maintaining proper accounts and invoices
Those having turnover below Rs. 40 lakhs can opt for a composite GST scheme meant for small service providers. Under this, a fixed tax rate of 6% applies without input tax credit.
GST on exports
If a script writer provides their services overseas and the produce i.e. script is also used outside India, it would qualify as export of services. In such export transactions, script writers can claim tax exemption by submitting relevant documents.
Some key documents required to claim GST exemption on export of script writing services include:
Copy of contract agreement/work order stating exported service
Copy of invoice raised on foreign client
Declaration from client about receipt of service
Bank realization certificate/FIRCA challan
Shipping bill
By furnishing these documents to the GST department, script writers can avoid payment of GST even if their turnover exceeds Rs. 40 lakhs exemption limit. This makes their services competitive in foreign markets.
Avail input credit
For registered script writers, GST paid on various inputs and business expenses becomes available as input tax credit (ITC). ITC allows set-off of taxes paid on inputs against the GST collected on outputs in the same month.
Common inputs attracting GST for script writers include:
Software subscriptions for screenwriting, movies review etc.
Office rent, furniture, equipment etc.
Internet and phone bills
Stationery items
Reference books and magazines
By claiming ITC, script writers can reduce their effective GST burden. ITC is a vital advantage under GST for service providers. Script writers need to cross-check ITC eligibility and follow proper documentation.
Record maintenance
Proper maintenance of financial accounts, tax records and invoices is crucial for smooth GST compliance by script writers. Some key records to maintain include:
Copies of issued tax invoices and receipt of payment documents
GST returns filed regularly
Input tax credit workings and supporting bills
Bank statements, cash book and ledger
Contracts for projects and export jobs if any
Export documentation like shipping bill in case of overseas supplies
The records need to preserved systematically for future reference or tax scrutiny as per the time limits prescribed under GST law. Digital records are preferable over physical files.
GST audit
Large script writing service providers having turnover above Rs. 2 crores are subject to GST audit. The audit verifies adherence to GST procedures, accuracy of returns filed and input tax credit availed.
Auditors appointed by tax department inspect books of accounts, cross examine transactions and identify any non-compliance. Post audit, the department may raise tax demands in case of short payment or bogus credits claimed.
To avoid discrepancies, script writers should conduct regular internal audits and get their accounts and compliances checked periodically even if they fall below the threshold limit. This ensures all processes are as per GST norms before an official audit.
Penalties for non-compliance
There are penalties prescribed under GST law for non-compliances like missing return filing due dates, short/non-payment of taxes and incorrect availment of credits. Some key penalties include:
Late fee for delayed filing of returns
Interest on net tax liability if return filed after the due date
penalty ranging from 0.25% to 5% of tax liability depending on the nature of offence
prosecution and even imprisonment in serious cases of evasion.
To avoid penalties, script writers must adhere to timely compliance, correctly calculate tax amount and carefully claim input credits only against items used in business. Any information submitted to tax authorities should be genuine and accurate.
GST brings script writing services under the uniform indirect tax regime prevailing across India. While it results in additional compliance costs, GST also offers benefits like seamless credits that help reduce effective tax burden for these professionals. Script writers need to understand GST implications and ensure strict adherence to the accompanying procedures and documentation standards. This would help conduct business smoothly in a GST-regulated environment.
Andrew Stroud