Film industry up in arms against Service Tax on Copyright

NEW DELHI: A core committee comprising senior members of the film industry, along with Members of Parliament, will meet Finance Minister Pranab Mukherjee to voice their protest against the levy of service tax on copyright.

The Film Federation of India FFI) , which will give detailed statistics stating the losses of the film industry and the meagre success rate, said that levy of service tax will sound the death knell of the Indian film industry and “we will be forced to shut down the entire Indian film industry”.

In a resolution passed at a joint meeting of the Film Associations including Multiplex Associations of India at the South Indian Film Chamber of Commerce in Chennai convened by the FFI, it was stated that “this additional service tax will be a big burden and cannot be levied on the temporary transfer of copyrights.”

The Indian film industry is highly volatile and statistics of the past 10 years show that only 7-8 per cent of the films all over India are successful and, thus, yield only the capital invested by the producer/rights holder along with a meagre profit. The rest of the films are big flops due to various reasons. The success rate in the film has been declining year after year.

The ‘Government seems to be aware’ of only Hindi hits like ‘Bodyguard’ and are carried away by the collections of the film and feel the sector is making huge profits, FFI said. The films which fail to collect or which flop at the box office are not brought to the notice of the Government. Thus, the Service Tax has been imposed ‘with the idea of collecting more taxes from an ailing industry.’

FFI pointed out that usually service tax levied is collectable from the end user of the services. Unfortunately the producers, distributors and exhibitors cannot pass on the service tax to the end user – the audience and the consumer - since most state governments have put a cap on the rates of admission in theatres.

“In that case, the service tax has been absorbed only by the over burdened film industry, which is totally unacceptable. We would also like to bring to the attention of the governments that the film industry is already burdened with heavy taxation of entertainment tax by the State Government apart from VAT being levied by several states. This being the case, the film industry is probably the highest taxed industry in the whole of India without getting any subsidy or financial help either from the central government or state governments," FFI averred.

Also present was K Vaitheeswaran, Advocate and Tax Consultant. FFI vice president Ravi Kottarakara was the convener of the meeting.

The meeting was attended by office Bearers and senior members from the FFI, South Indian Film Chamber of commerce, Tamil Film Producers’ Council, Tamil Nadu Film Distributors’ Federation, Tamil Nadu Film Exhibitors Association, Kerala Film Chamber of Commerce, Kerala Film Producers Association, Film Distributors Association of Kerala, Kerala Film Exhibitors Association, Andhra Pradesh Film Chamber of Commerce, Telangana Film Chamber of Commerce, Telugu Film Producers’ Council, Chennai, Karnataka Film Chamber of Commerce, Kannada Film Producers’ Association, Cinema Owners and Exhibitors Association of India, Eastern India Motion Pictures Association, Kolkata, and Central Circuit Cine Association.

FFI also has in its fold other important associations like the Indian Motion Picture Producers Association, the Akhil Bharatiya Marathi Chitrapat Mahamandal, the North India Film Association, Multiplex Owners Association of India, Delhi Film Distributors Council, Motion Picture Association, Bihar and Jharkhand Motion Picture Association, Indian Film Exporters Association, Motion Picture Association of America Inc, Kinematograph Renter’s Society Pvt. Ltd., Indian Documentary Producers Association, Chennai City Film Exhibitors Association, Film Makers Combine, Film & Television Producers Guild of South India, Graftii, South Indian Film Exporters Association, Telugu Film Producers Council, Hyderabad, Telugu Film Producers Association, Chennai, Tamil Nadu Film Distributors Council, Tamil Film Chamber of Commerce, The Indian Motion Picture Distributors Association, Western India Film Producers Association and Chamber of Movie & TV Programme Producers, Delhi.

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