The Income Tax officials conducting raids on Tollywood producers is not a new thing. Several raids happened in the past and for the first time, a number of teams raided all the top production houses of Telugu cinema. The raids are continuing for the fourth day and there are a lot of speculations going on about the reasons behind these raids and what the officials recovered. Here is a detailed analysis about why these raids took place:
Huge Foreign Funds: Most of the production houses are receiving huge foreign funds. The RBI has issued guidelines about the foreign funds received and the banks are signing declarations for the same when an amount of foreign funds is received. Most of the Tollywood producers are relying on foreign funds and the IT officials have kept a track on these funds and conducted raids.
Multiple Films and No Records: All the top production houses are busy producing multiple films and they are not capable of managing each minute transaction. Things turn clumsy when you have multiple films and the money is rotated between them. The records will not be transparent as money would be adjusted between the schedule payments to the remunerations. No production house has a clean financial record and this is also a reason for the raid.
Inflating Posters: For the sake of managing a healthy relation with the lead actor, every production house is posting inflating box-office numbers. This is like digging their own hole and falling in the trap. The producers are left in shock when the IT officials are questioning about the box-office numbers showing the posters as the proof. These posters turned out to be a threat for the production houses.
Wrong Budgets and Business Deals: The heroes and directors are taking big remunerations and to close the business deals, the makers are posting wrong budgets to sell their films. To fill the vacuum, there are a lot of fake transactions and wrong accounts in records. This impacts the entire credibility of the production house.
Remunerations in Black Money: The heroes, directors and some of the key technicians are demanding a part of the remuneration in cash and this is turning a huge headache for the producers. There would be no account, taxes and GST for this amount paid in cash. But the final budget remains unchanged. To please the actors and directors, cash is arranged and the transactions are mismatched.
Improper GST and TDS Records: Most of the production houses have no clear TDS and GST payments. Some of them are not deducting TDS and this is a huge blunder. Some of them are deducting TDS but they are not repaying them after the financial year. There are a lot of TDS and GST frauds in Tollywood and several complaints are raised.
