A R Rahman gets notice from Madras HC for evading income tax

The Income Tax Department has moved the Madras High Court against acclaimed music composer A R Rahman, alleging that he has had evaded tax in individual capacity by allegedly transferring his remuneration to 3.47 crore to his charitable trust.

The High Court has issued a notice to Rahman to explain the charges levelled against him.

A division bench of Justice TS Sivagnanam and Justice V Bhavani Subbaroyan had sent the notice to composer A R Rahman.

The IT department has found discrepancies in Rahman’s tax filing for the year 2011-12 . They stated Madras HC that A R Rahman had routed a remuneration of Rs 3. 47 crore to A R Rahman Foundation.
The huge sum was his salary for composing ringtones for a UK-based telecom company called Libra Mobiles. The incident is said to have happened in 2011.

Under the three-year contract, Rahman was to compose exclusive ringtones for the company. The IT department alleged that the music composer had instructed the company to make the payment directly to his A R Rahman Foundation.

The department said that since the charitable trust did not have a licence under the Foreign Contribution Regulation Act at that time, the amount of 3.47 crore was taxable income and cannot be considered as foreign contributions.

The counsel of the Income Tax department said that the income for work has to be received in Rahman’s individual account and it is taxable. After the deduction of income tax, it can be moved to the charitable trust.

Earlier, in February, the Madras HC had granted an interim stay on the order passed by the Commissioner of Goods and Services Tax (GST) and Central Excise (CE) asking AR Rahman to pay a sum of Rs 6.79 crore as arrear and an additional penalty of Rs 6.79 crore.

The GST officials said that Rahman earned income by composing for movies and receiving royalties for his music work. According to the GST council, the services were taxable and accused the composer for failing to pay service tax for the same.