Budget: Film industry reacts positively

NEW DELHI/MUMBAI: The film industry has reacted positively to the Budget for 2012-13, describing it as a special gift in 2012 that marks the beginning of the centenary year of Indian cinema.

The exemption of the film industry from service tax on copyrights relating to recording of cinematographic films is a welcome step that would go on to support the industry that has seen many ups and downs in recent years.

Said Reliance Entertainment CEO Sanjeev Lamba, "With no service tax now on transfer of copyrights, and entertainment becoming a part of the negative list, this is a huge positive for the industry. There will however be a negative impact due to the general increase in service tax, excise and custom duties. The determination of bringing GST from 12 August sounds quite optimistic. It will bring radical and positive changes in the taxation."

The Film Federation of India and film exhibitors have welcomed the announcement in the Budget taking “admission to entertainment or access to amusement services” out of the domain of service tax.

FFI President Vinod Lamba welcomed the exemption of the film industry from service tax on copyrights relating to recording of cinematographic films.

Producer Mukesh Bhatt is delighted with the government’s decision to exempt the film industry from service tax. He said, “There couldn’t be such a gift to the film industry that is celebrating its 100th year. With the removal of service tax on copyrights relating to recording of cinematographic films, the Finance Minister has saved us from the repercussion we had to go through passing the service tax burden from the producer to the distributor to the exhibitor. The economics of our business will definitely change.”

Reacting to the concessions, Bharatiya Janata Party member and prominent film personality Shatrughan Sinha told that these concessions had been long overdue and the government had been turning a deaf ear to them until the industry began putting pressure.

Film and Television Producers Guild CEO Kulmeet Makkar said in a telephonic interview that this was perhaps the first time that the Government had shown that the film industry mattered to it. He said that taking cinema out of the service tax net was a very positive development.

He said it was also very heartening that incentives had been given to venture capitalists, and this would bring in more people to stake money on good cinema.

It may be recalled that the Indian film industry had represented that colour, unexposed jumbo rolls of cinematographic film are not manufactured domestically and have to be imported. Heeding to their demands, Finance Minister Pranab Mukherjee proposed to exempt jumbo rolls of 400 feet and 1,000 feet from CVD (countervailing duty) by providing full exemption from excise duty.

However, the raising of the service tax has grieved a few. Cinemax CEO Sunil Punjabi said, "The impact of service tax moving from 10 to 12 per cent will adversely impact profitability but the positive angle is the implementation of goods and services tax (GST) from this year. That will have a positive impact.”

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