Film industry welcomes duty rationalisation on raw stock, decries service tax on copyright

MUMBAI: The film industry is disappointed with the 2010-2011 Budget for ignoring most of their demands. The one exception, though, is the rationalisation in the customs duty structure for import of raw stock by charging customs duty only on the carrier medium to remove the differential rates between importing digital masters of films and cinematograph film.

Says Motion Picture Dist Association (India) Managing Director Rajiv Dalal “ We are pleased with the Finance Ministry‘s decision to address the film industry‘s concerns over customs taxation on the import of DVD Masters. Charging customs duties on DVD Masters based on carrier medium instead of transactional value will allow for greater importation transparency as well as increased foreign direct investment into the Indian film and television sector.” 

Explains Shemaroo Entertainment Director Hiren Gada, “Earlier Customs duty used to be charged on intellectual property (DVD and Beta formats) imported from abroad on the carriage medium. But with the FM’s decision to rationalize the customs duty structure on the carriage medium, importing films from overseas would get cheaper. By this Hollywood would be the biggest beneficiary.”

The Budget also seeks to imply service tax on IPR copyright film and music. “Earlier, only VAT was imposed on the copyright (film) because the government had said that copyright was a product. Now, you cannot subject service tax on a product on which we pay VAT,” questions Gada.

“This would mean that the industry will have to shell out 10 per cent of its revenue by way of tax. As it is, the film industry is reeling under high entertainment tax and growing piracy. Producers are furious and I am sure in the coming week, there is bound to be a serious reaction to this step of the government,” adds Gada.

Laments producer Harry Baweja, “As it is there is a considerable drop in the production of films and if the government sticks to its proposal of charging service tax, production is bound to go down considerably.”

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