GST on Line Producer Services for Film Production
The West Bengal Authority for Advance Ruling decided that payments to foreign line producers are subject to 18% IGST under reverse charge.
- Ruling
- 45/WBAAR/2018-19 dated 26/02/2019
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Line producer services are classified as motion picture production services.
- Payments to foreign service providers are subject to IGST under reverse charge.
- Reimbursements for actual costs are fully taxable as part of the service value.
- The contract did not qualify the provider as a pure agent.
In short
Udayan Cinema Pvt. Ltd. asked if they must pay Integrated Goods and Services Tax (IGST) on payments made to a Brazilian company for line producer services. They also questioned if reimbursements for local costs in Brazil should be excluded from this tax. The authority ruled that the entire payment is taxable because the service is an import of services and the provider is not acting as a pure agent.
What has changed
How it worked before
Businesses often assumed that reimbursements for actual expenses paid to foreign vendors could be excluded from the taxable value of services.
What has changed
The authority confirmed that line producer services are taxable at 18% under reverse charge. It also clarified that unless a contract strictly meets the legal definition of a pure agent, all reimbursements are included in the taxable amount.
Who this affects
Indian film production companies hiring foreign line producers or logistics partners for overseas shoots.
An example
A Mumbai-based production house hires a company in Italy to manage local filming permits and crew. They pay the Italian firm a fee plus the actual cost of permits. Based on this ruling, the production house must pay 18% IGST on the total amount, including the permit costs, unless their contract explicitly defines the Italian firm as a pure agent under GST rules.
What you should do
Review your service contracts to see if they meet the strict criteria for a pure agent. Remember that this ruling only binds the company that asked; your local tax officer may have a different view on your specific contract.
If you do nothing
If you assume this ruling applies to you and fail to pay the required IGST, you may face interest and penalties during an audit. Tax officers are not bound by this ruling and may demand tax on the full value of your foreign payments. Relying on another company's ruling without professional advice is a significant compliance risk.
The terms explained
- Reverse charge
- A system where the person receiving the service, rather than the person providing it, is responsible for paying the tax to the government.
- Import of service
- A situation where the service provider is located outside India and the person receiving the service is located in India.
- Pure agent
- A person who enters into a contract to act as an agent for another and incurs costs on their behalf, which are then reimbursed without any profit margin.
The ruling in detail
Authority for Advance Ruling
Udayan Cinema Pvt Ltd
45/WBAAR/2018-19 dated 26/02/2019 · West Bengal
Questions before the authority
- Whether the applicant is liable to pay IGST on the reverse charge on payments to be made to CDIVF for line producer services.
- What should be the rate of tax depending upon the classification of the service of a Line Producer.
- Whether the reimbursements made on an actual cost basis will also be subject to IGST.
Facts
The applicant, an Indian company, intends to produce a feature film with portions shot in Brazil. They propose to appoint CDI Virtual Films Inc. (CDIVF) as a Line Producer to facilitate production services, including hiring local crew and procuring logistics. The applicant seeks to know if these payments are subject to IGST under reverse charge and if reimbursements for actual costs are taxable.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of Line Producer service | SAC 999612 Classified as motion picture production service |
| Liability to pay IGST on payments | Yes Liable under reverse charge mechanism |
| Taxability of reimbursements | Taxable No deduction available under current contract |
The authority held that the services provided by the Line Producer are classifiable as motion picture production services under SAC 999612 and are subject to IGST under reverse charge. It further ruled that no deduction is available for reimbursements made on an actual cost basis under the current contract terms. The applicant is liable to pay IGST at the rate of 18% on the total payments made to the Line Producer.
Reasoning
The authority determined that the Line Producer is not an intermediary or event manager but is providing an integral **motion picture production service**. Because the recipient is in India and the supplier is in Brazil, the transaction constitutes an **import of service** under section 7(4) of the IGST Act. The authority found that the contract does not establish the Line Producer as a pure agent under rule 33 of the CGST Rules, as the producer retains production rights and bears the risk. Consequently, the entire payment, including reimbursements, is subject to IGST under Sl No. 1 of Notification No. 10/2017 – IGST (Rate).
Provisions relied on
- Section 97(2)(a), (b) & (e) of the GST Act
- Section 20(xviii) of the IGST Act, 2017
- Section 7(4) of the IGST Act, 2017
- Section 13(3) to (13) of the IGST Act, 2017
- Notification No. 10/2017 – IGST (Rate) dated 28/06/2017
- Notification No. 08/2017 – IT (Rate) dated 28/06/2017
- Rule 33 of the CGST Rules, 2017
For the practitioner
This ruling clarifies that a Line Producer's services are generally classified as motion picture production services rather than intermediary or event management services. It serves as a warning that reimbursements for actual costs are fully taxable unless the contract explicitly satisfies the strict criteria for a **pure agent** under rule 33. Practitioners should ensure that contracts are drafted with precise language regarding agency status if they intend to exclude reimbursements from the taxable value.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/wb_45_2018-19_udayan_cinema_pl.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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