CBDT Advises Uniform Expense Verification for Entertainment Sector

F.No.225/215/2018/ITA-II, dated 21-10-2025

The entertainment sector comprises various segments, including television, radio, music, event management, film, animation and visual effects, broadcasting, sports, and amusement. Expenses incurred by different segments may be examined on a case-by-case basis, depending on the nature of business undertaken by assessees.

The Central Board of Direct Taxes (CBDT) has issued an advisory to Assessing Officers (AOs) on the examination of expenses incurred by entities in the entertainment sector. The advisory focuses on the following key areas:

1. Pre-Operative Expenses

Pre-operative expenses are generally incurred before the commencement of a business. AOs are advised to examine such expenses in relation to the actual commencement of the businesses of assessees in the entertainment sector.

• Relevant Provision – Section 32D of the Income-tax Act, 1961, which allows amortisation of pre-operative expenses.
• Objective – Ensure that pre-operative expenses claimed for amortisation are genuine and directly related to the business setup.

2. Declaration of Expenses for Feature Films

Entities involved in the production of feature films are required to furnish Form No. 52A.

• Timeline – Within 30 days from the end of the financial year or within 30 days from the date of completion of the film, whichever is earlier.
• Contents of Form 52A:

1. 1. Start and completion dates of the film.
   2. Details of payments exceeding Rs. 50,000 (in aggregate) made or payable to any person involved in the production.

• Compliance – The Assessing Officer may verify the information provided in Form 52A.
• Penalty – Failure to furnish Form 52A on time may attract a penalty under Section 272A of the Income-tax Act.

3. Expenses Incurred on the Production of Feature Films

During assessment, deduction of expenditure related to feature film production may be examined as per the Income-tax Rules.

3.1 Deduction for Film Producers

• Relevant Rule – Rule 9A of the Income-tax Rules, 1962.
• Scope – A film producer can claim the cost of production as a deduction while computing business profits.
• Applicability – Includes scenarios such as:

1. 1. Sale of all exhibition rights of the film.
   2. Commercial exhibition by the producer.

• Conditions – Deduction is allowed subject to specified conditions under the Rule.

3.2 Deduction for Film Distributors

• Relevant Rule – Rule 9B of the Income-tax Rules, 1962.
• Scope – A distributor may claim a deduction for expenditure incurred in acquiring film distribution rights.

This advisory ensures standardisation and clarity in examining expenses within the entertainment sector while ensuring compliance with relevant provisions of the Income-tax Act and Rules.

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