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Name: Arshad Shaikh Roll No:48 Topic: Legal & tax implications for entertainment base events organized by Corporates. Submitted To: Prof Nisar Merchant

CORPORATE BASED ENTERTAINMENT EVENTS

Corporate entertainment relates to private events held by corporations or businesses for their staff, clients or stakeholders. These events can be for large audiences such as conventions and conferences, or smaller events such as retreats, holiday parties or even private concerts.

An event planner has to understand and work for the best interest of its clients tastes and relaxation modes. In this fast moving world people hardly have anytime left for recreation and in most cases their social life is totally cut off because they hardly get time from their busy work schedule which to certain extent affects their professional life. So keeping in mind about this the business world in order to rejuvenate their employees plans corporate events involving various multi-national companies, trade-biz shows, business theme parties, round table debates, workshops business lunch parties and so on.

Legal issues
The complexity of event organization means there may be legal issues to address before, during and after the event. It is important that one seeks professional legal advice before you planning for your event so that there are no obstructions in the smooth functioning of the event. Some important matters that may require legal advice are: 1) Contracts with staff, volunteers, suppliers, performers, sponsors, contractors, venues, any other relevant parties. 2) Use of intellectual property including copyright 3) Conduct of revenue-raising activities 4) Necessary insurance 5) Wages and other employee entitlements e.g. correct wages must be paid to all staff including performers, as well as superannuation and other entitlements that might arise in relation to a particular engagement. 6) Taxation issues, including GST where applicable 7) Need for obtaining relevant licenses and approvals for the event e.g. planning approval, liquor license, Working With Children Check etc. 8) Environmental protection laws, including those for noise and waste management 9) Compliance with other applicable laws.

Tax Implications Following taxes are to be paid by an event management company. 1) Income Tax 2) TDS (Tax deducted at source) 3) Service tax 4) VAT 5) Taxes related to moving goods and merchandise from one destination to others. Income Tax and National Insurance Contributions Income tax and employee NICs (Class 1) are a tax on the employee whereas employers NICs (Class 1a) are a tax on the employer. The basic rule is that if you provide an employee with anything other than pay it may count as an expense or benefit. Expenses that are wholly, exclusively and necessarily incurred in the performance of duties are not subject to income tax and NICs. For example staying in a hotel on a business trip (subsistence) does not attract these taxes. When an employee receives a benefit in kind they may be liable to tax on that benefit. Entertainment is a benefit in kind and has the following implications. Example Income Tax Due Class 1 NICs Due Employer entertains a client No No Employer entertains an employee Yes Yes

Service Tax Source: http://www.servicetax.gov.in/st-profiles/event-mgmt.htm

Date of Introduction: 16.08.2002 vide Notification No.8/2002-ST, dated 01.08.2002. Taxable Service means any service provided or to be provided, [to any person], by an event manager in relation to event management. (Section 65 (105) (zu) of the Finance Act, 1994)

Rate of Tax & Accounting Code:

Rate of Tax Accounting Code Service Tax 10% of the value of services 00440197 Education Cess 2% of the service tax payable 00440298 Secondary and 1% of the service tax payable. 00440426 Higher Education cess Other As levied or applicable 00440198 Penalty/interest (Rate of tax is effective from 24.02.2009.)

The service tax on event management companies in India is 12.36%

TDS
The best way to make a differciation in 194J and 194C is to bifurcate between Contractual amount and professional Charges. I.e. Procure a bill from the event management in a way which specifies Total amount towards contract expenses (which will attract TDS @ 2%/1% u/s 194C) and Event Management Charges (Which will attract TDS @ 10% u/s 194J)

Value added tax

Reclaiming VAT on Business Entertainment You cannot reclaim VAT on business entertainment. Business entertainment is defined as any form of free or subsidised entertainment or hospitality to non-employees. You can reclaim VAT on employee expenses and entertainment expenses if those expenses relate to travel and subsistence or where you entertain only employees. VAT: Examples of non-tax allowable business entertainment i.e. business entertainment for non-employees: food and drink accommodation eg hotels theatre and concert tickets sporting events and facilities entry to clubs and nightclubs use of capital assets such as yachts and aircraft payments made to third party business entertainment organisers

Corporation Tax An expense is tax allowable for corporation tax purposes if it is wholly and exclusively used for business purposes. An exception to this rule is business entertainment. Business entertainment is not allowable for corporation tax purposes. There are of course a couple of exceptions to the rule. Corporation Tax: Examples of tax allowable business entertainment 1) Staff entertainment 2) Subsistence 3) Sponsorship if wholly and exclusively for the business

POLICE PERMISSION Permission for your loudspeaker: According to the Noise Pollution (Regulations and Control) Rules 2000, a loudspeaker or a public address system shall not be used at night between 10 p.m. to 6 a.m. But New Year is special case where concerned authority allows you to play music or use loudspeaker for your New Year party. For conducting pooja / birthday party / family get-together or religious ceremony at your residence, you dont require a premises or performance license. However, if you intend to use a loudspeaker, you will have to make an application to the concerned Police station. License for serving liquor in parties: A consumer is allowed to keep 18 liters of IMFL/Beer (in any proportion) at his residence at a time for bonafide consumption by him

and family members/guests. For higher possession, he can apply to the Department for a permit for which a fee of Rs. 2000/- is charged. For serving liquor in the party, association or club has to get special or temporary excise license. Temporary Excise License is issued for parties hosted by individual (L49A) and Licensed Hotel, Club, Restaurant inside their premises (L20). Parking Space: Lack of parking space is one of the problems facing in developing cities. Police and concerned authorities limit the parking or restrict the entry of certain vehicles on New Year eve. If you are planning to organize or host a New Year party in your apartment and planning to invite your friends, relatives or colleagues, ensure that your apartment provides parking space for their vehicle. No Objection Certificate: For organizing or hosting a New Year party you need to get No Objection Certificate (NOC). If you are organizing party in your apartment, you need to get NOC from your landlord or neighbors in your apartment and from apartment owners association. If apartment owners association is conducting or hosting the New Year party, they will have to get NOC from its members and residents in apartment. Other NOC required for your organizing or hosting New Year party are NOC from property manager or Apartment Owners Association NOC from concerned Police station, NOC from Fire Brigade, NOC from Electrical Inspector, NOC from Health Department of BMC (if eatables are being served)

The preparation should start well in advance, if one is to avoid last minute crunches and party-fright. The best way to save time and effort is to plan a menu that is no fuss, healthy and tasty-something that the guests enjoy eating. Get NOC from concerned authority and ensure the safety and security of the attendees.

IPRS

The Indian Performing Right Society Limited (IPRS) is an Association of Composers, Authors and Publishers of musical works. IPRS is a Company Limited by Guarantee and Registered under the Companies Act, 1956. It is a Non-profit making body set up under the provisions of Section 33 of the Copyright Act, 1957 to administer and control the Performing Rights and Mechanical Rights of its members. This Society came into existence on 23rd August, 1969. IPRS licence: The Society grants blanket Licences for a moderate annual charge which enables the holders thereof to comply with the provisions of the Copyright Act, 1957. These Licenses authorise the public performance, broadcasting, or diffusion by wire of any of the millions of works which the Society controls on its members behalf as well as on behalf of the members of its affiliated societies throughout the world. In certain cases, permits are issued for the use of the repertoire or of specific works at one performance or at a short series of performances. The Society's Licence is necessary for any public performance of copyright music under its control regardless of the nature of the entertainment or the kind of premises at which the performance takes place and irrespective of whether a charge for admission is made. The licence charges: The royalty charges payable by licensees ( which are normally payable annually in advance) are calculated under a series of carefully devised tariffs which take account of the different circumstances in which music is performed in the various categories of premises and classes of entertainment. Obligation to Join IPRS: There is no obligation on you to do so. You are the owner of your copyright, and in theory you are at liberty to administer it yourself if you so wish. But if you study this brochure you will realise that in practice you will find it quite impossible to do so. That is why the world-wide system of organisations for the collective administration of copyright was devised. It is a system which has stood the test of time, for the first organisation for the administration of performing rights in music was founded as long ago as 1851. There are now no fewer than 192 of them all over the world, and their number is growing steadily.

Royalties distribution: As the Society is a non-profit making body, all the royalties it collects are distributed to its members and affiliated societies after deduction only of its administration costs subject to a

maximum of 15%. The net royalties are distributed to the members as far as possible in accordance with the extent to which their particular works have been broadcast or publicly performed. The royalties apportioned to each work are then distributed among the interested members and affiliated societies in accordance with their contracts and with the Societys Rules.

PPL How to Obtain PPL Licence? The licence for Public Performance of Pre-recorded music can be obtained by making an application in the prescribed format and effecting a payment of Licence fee specified in the Published Tariff. Need of PPL Licence: All those who play or communicate pre-recorded music (of our members) in public places be it acoustic or visual, whether in of Gramophone Records, Music cassette or CDs or Radio or Cable network or in any other form / technology in must obtain prior licence from PPL. Some examples for the sake of illustration (non-exhaustive list): Broadcasting (radio, TV); Internet web-casting; Mobile telephony (caller ring-back tunes, track streaming, audio-cinema, WAP/IVR, etc) and Public Performance. Examples of such Establishments in Public Performance are AC Restaurant Aircraft Airport Terminals Amusement Parks Art Galleries Banks Banquet Halls Bars Beauty Parlors Bowling Alleys Buses Cafes Casinos Cinemas Clinics Clubs Dance Centres Discotheques DJs Exercise Classes Exhibitions Factories Events Guest Houses Hospitals Hotels Magic Shows Museums Non-AC Restaurants Nursing Homes Offices Pubs Railway Stations Railway Trains Reception Areas Shops Spectator Sports Swimming Pools Telephone - Music On Hold Theaters

(The above list is illustrative, and not exhaustive ) Caution: Any Broadcasting or Performance of Copyrighted Music Recording without first having a licence from PPL constitutes an Infringement of Copyright under The Copyright Act of 1957. It is a Cognizible & Non-bailable offence which attracts heavy penalty which can extend upto a fine of Rs 2 lakhs and imprisonment of 3 years.

Licence for Public Performance of Music recordings is Mandatory. Subject to the Copyright Act of 1957, it is mandatory for all those who play Pre-recorded music in the form of Gramophone Records, Music cassettes or CDs or Radio or Audiovisual in public places to take prior licence from the Copyright Society for Sound Recordings namely Phonographic Performance Limited (PPL). in respect of the repertoire its member music label. As the registered copyright society in respect of Sound Recordings PPL has the authority to administer the Broadcasting / Telecasting and Public Performance Rights on behalf of a large number of important music companies in India who are its members. PPL administered repertoire encompasses all major Indian languages, including Hindi, Punjabi, Bengali, Telugu, Tamil, Marathi, Gujarathi, Malayalam, Bhojpuri, etc. (both film and nonfilm music like devotional/spiritual, Ghazals, Classical, folk, Indi-pop, etc) and English/International songs. Consequently, any performance of Indian or International music from Sound Recordings of PPL members in Public Places or Commercial Establishments such as Hotels, Restaurants, Cinema Halls, Discotheques etc, without first having obtained a Licence from PPL, constitutes an Infringement of copyright under The Copyright Act of 1957. Such violation of copyright is Cognizable & Non-bailable offence, attracting heavy Penalties. Licensing Streams The value of music is indisputable. Music is everywhere around us: on radio and television, in films, bars, clubs, discotheques, gyms, restaurants, hotels, offices, shopping malls, concerts, fetes, festivals, airplanes and taxis. Recordings of music are manufactured, sold, and distributed on a large scale. Music is an important facet of modern life. PPL has the authority to administer the Broadcasting, Telecasting, Webcasting and Public Performance rights on behalf of more than 260 music companies in India.

PERMISSION FOR USE OF LOUDSPEAKER DURING PROGRAMME

License/Permi t Issuing Authority Application Submitted To Fee
Rs 5 Court Fee Stamp AND

Documents Required
1. Application Form

Permit for use of loudspeaker Sr Police during Inspector programme

Police Station

Rs 10 Application 2. Copy of Fee Loudspeaker Contractor Permit Rs 50(7-days permit) 3. Permission for Programme (if Rs 7/day (7-30 necessary) days) Rs 100/month Rs 500/year

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