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Sachin Tendulkar may be the toast of the nation today with a series of sterling performances in South Africa, but he has earned a rap on his knuckles from the Collector of Stamps (Enforcement) for not paying stamp duty on some of his endorsements.
Some of India's biggest Bollywood names have also incurred the stamp duty office's wrath for not paying the duty despite several notices.
A final intimation notice is now being sent to celebrities who continue raking in the moolah thanks to their mega deals but have allegedly defaulted on the stamp duty.
"As per our records, a few celebrities and sportsmen who entered into advertisement endorsements from 2006 onwards have not responded to our notices asking for details of stamp duty paid, if any, on their endorsement agreement as brand ambassadors," Collector of Stamps (Enforcement) P K Bhoye told MiD DAY.
"I have instructed my department to issue fresh reminder notices under article 5(H)(A) of the Bombay Stamp Act, 1958, to all the celebrities and the endorsing companies who are defaulters as per our record.
They (celebrities/endorsing companies) are expected to respond within 30 days of receipt of the said notice failing which appropriate action would be taken under the Bombay Stamp Act," he added. Bhoye hinted that the notices will be dispatched sometime next week.
He clarified that either the company or the celebrity has to pay the stamp duty based on the terms of their agreement and that both parties are not liable to pay it.
As per the data available, nine celebrities, including Sachin, have done over 20 advertisement campaigns as brand ambassadors for various companies between 2006 to 2009. Notices were issued to them soon after the ads were released, said officials at the stamp office.
The celebrities who have been issued these notices maintain that their contracts clearly mention that the stamp duty will be paid by the company which is signing them on, and hence, they cannot be held liable.
However, some celebs like Ranbir Kapoor, Akshay Kumar and Twinkle Khanna, who did various advertisements in 2010, have paid the duty.
As per the records, Ranbir Kapoor was signed on for a commercial by a tobacco manufacturing company and on February 20, 2010, a stamp duty of Rs 3 lakh, with an additional penalty of Rs 10,000, was paid.
Akshay Kumar entered into an endorsement deal with a private finance company and the authorities charged a stamp duty of Rs 2.7 lakh with an additional penalty of Rs 10,800.
Similarly, Twinkle Khanna entered into a contract with an IT company and, on October 6, 2010, a sum of Rs 13,500 and a penalty of Rs 1,000 was paid.
While Akshay Kumar is out of the country, his wife Twinkle Khanna replied to MiD DAY's query. "Akshay and I have no pending stamp duty to pay. It has all been cleared last year," she said.
According to Bhoye, 0.25 per cent of the consideration is supposed to be paid as stamp duty on such endorsement contracts. If the party defaults on the payment, a penalty of either an interest of 2 per cent per month or 200 per cent of the amount due (whichever is higher) is imposed.
According to officials at the stamp office, keeping track of stamp duty due on celebrity endorsements is just one area of their work.
The enforcement department of the office works on information basis to seek out stamp duty violators and collects the same along with the penalty. Last year, the department collected approximately Rs 35 crore under various heads.
Usually, an officer from the department gets wind of a new celebrity endorsement when he spots a new commercial. The department issues a notice asking for details of the endorsement deal.
When the parties respond, their documents are inspected. If any discrepancies are found, they are asked to pay the balance with a penalty imposed on the deficit. The full amount has to be paid with a penalty if no response is received and the concerned party has not paid the stamp duty.
MiD DAY got responses from some stars and some spokespersons but attempts made to contact others did not yield any results:
Kareena Kapoor
Kareena is currently out of India. Her associate said, "Every celebrity agreement has a clause which states that stamp duty charges and the liability thereof won't be of the talent and will be borne by the company."
Bipasha Basu
Bipasha's spokesperson said, "Stamp duty on endorsement is the liability of the brand and not the artist and every endorsement contract that comes to the artist is post franking. If the stamp authorities have sent notices earlier, it is important to know which address they have marked it to, as Bipasha travels for shoots most of the time. Also, her chartered accountant handles all her tax-related issues"
Fardeen Khan
"As per my Chartered Accountant we have already replied to the respective authorities saying that I am not liable to pay stamp duty as the brand in question has its head office registered in New Delhi and the contract was also signed in Delhi."
Suniel Shetty
"I do not remember receiving any notice from the stamp authorities. If I am paying the duty today, I don't see any reason why I wouldn't have paid it then. However, if something has been missed out, it may be due to oversight. I am sure I have cleared all my dues."
Kareena Kapoor
Year of endorsement: 2008
Stamp duty due: 1,85,000
Penalty due (as on 2008): 1,31,450
Total outstanding (as of 2008): 3,16,450
Satish Shah
Year of endorsement: 2009
Stamp duty due: 12,681
Penalty due (as on 2009): 10,190
Total outstanding (as of 2008): 22871
Sachin Tendulkar
Year of endorsement: 2006
Stamp duty due: 2,14,375
Penalty due (as on 2007): 2,36,725
Total outstanding (as of 2007): 4,51,100
Bipasha Basu
Year of endorsement: 2008
Stamp duty due: 37,500
Penalty due (as on 2008): 48,750
Total outstanding (as of 2008): 86,250
Fardeen Khan
Year of endorsement: 2006
Stamp duty due: 11,250
Penalty due (as on 2006): 13,725
Total outstanding (as of 2006): 24,975
Suniel Shetty
Year of endorsement: 2006
Stamp duty due: 17,910
Penalty due (as on 2006): 20,416
Total outstanding (as of 2006): 38,327
(All amounts in rupees)
Rs 3 lakh
The stamp duty with an additional penalty of Rs 10,000 was paid by Ranbir Kapoor
Rs 2.7 lakh
The stamp duty with an additional penalty of Rs 10,000 paid by Akshay Kumar
Some of India's biggest Bollywood names have also incurred the stamp duty office's wrath for not paying the duty despite several notices.
A final intimation notice is now being sent to celebrities who continue raking in the moolah thanks to their mega deals but have allegedly defaulted on the stamp duty.
"As per our records, a few celebrities and sportsmen who entered into advertisement endorsements from 2006 onwards have not responded to our notices asking for details of stamp duty paid, if any, on their endorsement agreement as brand ambassadors," Collector of Stamps (Enforcement) P K Bhoye told MiD DAY.
"I have instructed my department to issue fresh reminder notices under article 5(H)(A) of the Bombay Stamp Act, 1958, to all the celebrities and the endorsing companies who are defaulters as per our record.
They (celebrities/endorsing companies) are expected to respond within 30 days of receipt of the said notice failing which appropriate action would be taken under the Bombay Stamp Act," he added. Bhoye hinted that the notices will be dispatched sometime next week.
He clarified that either the company or the celebrity has to pay the stamp duty based on the terms of their agreement and that both parties are not liable to pay it.
As per the data available, nine celebrities, including Sachin, have done over 20 advertisement campaigns as brand ambassadors for various companies between 2006 to 2009. Notices were issued to them soon after the ads were released, said officials at the stamp office.
The celebrities who have been issued these notices maintain that their contracts clearly mention that the stamp duty will be paid by the company which is signing them on, and hence, they cannot be held liable.
However, some celebs like Ranbir Kapoor, Akshay Kumar and Twinkle Khanna, who did various advertisements in 2010, have paid the duty.
As per the records, Ranbir Kapoor was signed on for a commercial by a tobacco manufacturing company and on February 20, 2010, a stamp duty of Rs 3 lakh, with an additional penalty of Rs 10,000, was paid.
Akshay Kumar entered into an endorsement deal with a private finance company and the authorities charged a stamp duty of Rs 2.7 lakh with an additional penalty of Rs 10,800.
Similarly, Twinkle Khanna entered into a contract with an IT company and, on October 6, 2010, a sum of Rs 13,500 and a penalty of Rs 1,000 was paid.
While Akshay Kumar is out of the country, his wife Twinkle Khanna replied to MiD DAY's query. "Akshay and I have no pending stamp duty to pay. It has all been cleared last year," she said.
According to Bhoye, 0.25 per cent of the consideration is supposed to be paid as stamp duty on such endorsement contracts. If the party defaults on the payment, a penalty of either an interest of 2 per cent per month or 200 per cent of the amount due (whichever is higher) is imposed.
According to officials at the stamp office, keeping track of stamp duty due on celebrity endorsements is just one area of their work.
The enforcement department of the office works on information basis to seek out stamp duty violators and collects the same along with the penalty. Last year, the department collected approximately Rs 35 crore under various heads.
Usually, an officer from the department gets wind of a new celebrity endorsement when he spots a new commercial. The department issues a notice asking for details of the endorsement deal.
When the parties respond, their documents are inspected. If any discrepancies are found, they are asked to pay the balance with a penalty imposed on the deficit. The full amount has to be paid with a penalty if no response is received and the concerned party has not paid the stamp duty.
MiD DAY got responses from some stars and some spokespersons but attempts made to contact others did not yield any results:
Kareena Kapoor
Kareena is currently out of India. Her associate said, "Every celebrity agreement has a clause which states that stamp duty charges and the liability thereof won't be of the talent and will be borne by the company."
Bipasha Basu
Bipasha's spokesperson said, "Stamp duty on endorsement is the liability of the brand and not the artist and every endorsement contract that comes to the artist is post franking. If the stamp authorities have sent notices earlier, it is important to know which address they have marked it to, as Bipasha travels for shoots most of the time. Also, her chartered accountant handles all her tax-related issues"
Fardeen Khan
"As per my Chartered Accountant we have already replied to the respective authorities saying that I am not liable to pay stamp duty as the brand in question has its head office registered in New Delhi and the contract was also signed in Delhi."
Suniel Shetty
"I do not remember receiving any notice from the stamp authorities. If I am paying the duty today, I don't see any reason why I wouldn't have paid it then. However, if something has been missed out, it may be due to oversight. I am sure I have cleared all my dues."
Kareena Kapoor
Year of endorsement: 2008
Stamp duty due: 1,85,000
Penalty due (as on 2008): 1,31,450
Total outstanding (as of 2008): 3,16,450
Satish Shah
Year of endorsement: 2009
Stamp duty due: 12,681
Penalty due (as on 2009): 10,190
Total outstanding (as of 2008): 22871
Sachin Tendulkar
Year of endorsement: 2006
Stamp duty due: 2,14,375
Penalty due (as on 2007): 2,36,725
Total outstanding (as of 2007): 4,51,100
Bipasha Basu
Year of endorsement: 2008
Stamp duty due: 37,500
Penalty due (as on 2008): 48,750
Total outstanding (as of 2008): 86,250
Fardeen Khan
Year of endorsement: 2006
Stamp duty due: 11,250
Penalty due (as on 2006): 13,725
Total outstanding (as of 2006): 24,975
Suniel Shetty
Year of endorsement: 2006
Stamp duty due: 17,910
Penalty due (as on 2006): 20,416
Total outstanding (as of 2006): 38,327
(All amounts in rupees)
Rs 3 lakh
The stamp duty with an additional penalty of Rs 10,000 was paid by Ranbir Kapoor
Rs 2.7 lakh
The stamp duty with an additional penalty of Rs 10,000 paid by Akshay Kumar
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