The indirect taxation system in India has seen a landmark change with the introduction of GST. It has eased out business operations across all the sectors of our country.
However, the GST council is constantly trying to improvise its applications through regular feedback from various sectors and industries as well as the business fraternity. This includes the music industry as well.
When considering GST principles and registration procedures for musicians, composers, or sound engineers, it should be understood that mostly the recipient of their services would be a production house or an advertising agency, which in turn makes their transactions a B2B (business to business) one.
As a music industry professional, you might be wondering what GST has in store for you and your business. Here are some key aspects you need to be aware of regarding the current tax regime.
Important Points Regarding GST For Music Professionals
According to the GST act and rules, any individual, belonging to any industry or freelancing profession, earning a revenue of over and above 20 lakhs through their services, in a financial year, is liable for gst certificate. In some states, this bracket is of 10 lakhs. However, it should be noted that the GST net does not cover individuals with salaried income.
- Musicians who work from their home studio can take an input tax credit for any inward supplies.
- When procuring musical instruments or any other purchases, they are liable to pay customs duty and are also subject to pay IGST on it, falling under the import category.
- For people running music classes or a music academy, it would be a B2C transaction, and in that case, they are liable to pay a GST at the prescribed rates. However, they would not be eligible for input credit.
- Also, it should be noted that if your annual turnover remains under the optional limit of registration, it is not compulsory to register for GST.
- For musicians who get their songs mastered by international engineers based in the UK and USA, services received from them would be treated as import services and IGST would be charged as per the guidelines.
Do Musicians Need Multiple GST Registrations?
Music professionals can have only one GST registration in the state from where they are offering their services. However, if they wish, they can have different registrations state-wise, and the identity for each would stand separate.
Contrarily, in case of an individual holding multiple business verticals in a single state, there may be multiple registrations subject to the prescribed GST conditions of that state.
But if you happen to be an individual with a single business structure operating in the music industry, you cannot have different registration numbers. Also, as a single freelance artist and a proprietor, you would be permitted to operate under a single GST number alone.
Filing And Registration Of GST For Music Professionals
As per guidelines for gst registration online india for music professionals, returns are to be filed on a monthly or quarterly basis.
However, for regular registered persons, they have to file three returns each month as under:
- GSTR-1 for output sales on or before 10th of next month
- GSTR-2 for input sales from 11th to 15th of next month
- GSTR-3 from 16th to 20th of next month
Irrespective of whether you have extended any sales or services, do bear in mind that GST needs to be filed regularly. Failure to comply with the tax rules may lead to hefty fines and penalties.
Taxation On Instruments
Here are some points to be understood regarding the impact of GST on the music industry and musical instruments
- Western musical instruments have been put under the higher slab category of 28% under the GST regime in an attempt to promote native instruments.
- Western musical instruments like piano, guitar, saxophone, etc. have a pre-imposed 28% GST on them while Sitar has no indirect tax on it. It has been completely exempted from tax.
- The idea of imposing a high GST on imported western instruments is to promote local instruments and local music.
Music, and everything related to it, is a work of art. However, in India, the revenue earned by providing these services is treated as taxable.
Various aspects of the music industry fall under separate brackets for GST mandates which need to be fulfilled by every person linked with it directly or indirectly.