Budget: Film industry wants CVD exemption on raw stock

NEW DELHI: The film industry, which had heaved a sigh of relief when the countervailing duty for unexposed colour films was abolished in 2002, is once again battling for a similar status since it was re-introduced in 2004.

Although the raw stock is imported, the CVD was imposed over two decades earlier since the Hindustan Photo Films sliced the jumbo rolls into smaller ones.

"CVD should be done away with since it was introduced to protect domestic manufacturers while raw film is imported," says Mukesh Bhatt.

Delegations of the film industry led by Film Federation of India President Jitendra Jain recently called on Finance Minister Pranab Mukherjee and Information and Broadcasting Minister Ambika Soni in separate meetings to press various demands relating to the budget, and said though unexposed negatives are not produced within the country, the industry has been paying CVD. Though this was removed in 2002, it was re-imposed in 2004 at the rate of 16 per cent.

While Soni told the delegation that she had already raised this issue with the Finance Minister, Mukherjee candidly told the delegation that he would listen to them patiently but could not make any commitment.

The industry is also seeking parity in taxation amongst all media, as it feels the government is encouraging new technologies by offering them tax concessions while ignoring the film industry which was the biggest foreign exchange earner and one of the largest employers in the country. Soni assured the industry that she has sought exemption from service tax to the film industry.

FFI Secretary General Supran Sen told that the industry was also seeking relief in Fringe Benefit Tax. The film industry has had to pay huge FBT in booking of hotels, travel and food even when traveling for professional work.

The government has also been requested to consider relief on remittances abroad under Section 195B of the Income Tax Act as these are for professional work or for hiring foreign technicians.

The industry wants advance tax and the interest levied under Section 234B and 234C to be made discretionary and not mandatory for the film industry as it often becomes difficult – particularly the months of December and January – since the profits from any film are subject to a high degree of uncertainty. .

Tax deducted at source for licensing of copyright varies between 10.3 to 11.33 per cent, which the film industry feels is very high particularly for regional cinema. The film delegation asked the Minister to consider regrouping TDS that is levied upon the industry.

Soni has supported the demand by the Ficci for a 10-year tax holiday for the emerging sectors such as gaming, animation and visual effects.

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