Indian film industry bats for simplified tax structure

NEW DELHI: The Indian film industry is up in arms against the Goods and Services Tax Bill proposed by the government, as far as entertainment levies go.


It has been voicing its concerns on the forthcoming GST bill as the proposed bill does not subsume all the taxes levied on the film sector.


The film industry strongly feels that entertainment taxes levied by local bodies must be subsumed in the proposed GST regime. To this effect, the Film and Television Producers Guild urged the Government that all entertainment taxes, whether levied by the States or local bodies, be subsumed in the GST.


The Government can implement this proposal by making amendment to the Constitution (122nd Amendment) Bill 2014 by deleting entry 62 to the List II (State List) to the Seventh Schedule to the Constitution of India.


In a statement, the Guild said that the Constitution (100th Amendment) Bill 2014 passed earlier this month by the Lok Sabha gives effect to change in taxing powers of the State and Central Governments and making suitable changes to introduce Goods and Services Tax in India. The Bill has now gone to the RajyaSabha.


The Bill seeks to subsume almost all indirect taxes charged by Central and State Governments.


However, the Guild noted that most of the taxes would be subsumed in GST with one notable exception of the entertainment tax levied and collected by local bodies. The Bill allows the entertainment tax to be levied and collected by local bodies (that is, panchayats and municipalities). The tax would be over and above the State and Centre GST on entertainment.


The local body entry tax (such as Octroi) estimated at Rs 14,000 crore per annum for Maharashtra alone, has been fully subsumed in GST. However, local body entertainment tax estimated at Rs 25 -Rs 30 crore across India is kept out of GST allowing such local bodies to charge an incremental entertainment tax over and above GST.


The Bill has deleted exclusive power of the Central government to tax all services and manufacture of goods (except for excise duty on tobacco products, petroleum and alcohol for human consumption). Similarly, exclusive power to tax on sale and purchase of goods, all types of entry of goods, luxury, betting and gambling and entertainment tax (unless levied and collected by local bodies) except for tax on purchase and sale of alcohol for human consumption has been taken away.


Film and Television Producers Guildpresident Mukesh Bhatt said, “Internationally, films are considered as arts and cultural ambassadors and offered many incentives and financial support governments around the world. Indian films have contributed significantly in uniting the nation and taken Indian culture to international audience. Films should be treated at par with other services and not be singled out for the additional entertainment tax. In fact, the Government implies to treat entertainment at par with sin goods such as alcohol and tobacco, which are also kept out of GST.”


An Ernst and Young report titled “Subsume entertainment tax in GST” states that supplementary levies in addition to GST are warranted only for products that are harmful to health such as tobacco and alcohol or those that are detrimental for the environment (petroleum). There are no negative externalities associated with entertainment. It must be considered at par with other goods and services and should be given a fair tax treatment.


Producer and Excel Entertainment co-founder Ritesh Sidhwani added, “Besides, levy of this tax at the local body level will neither be simple nor yield much revenue. India has a total of 640 districts, even if a small percentage of the local bodies seek to impose the tax, compliance and enforcement will be a nightmare.”


The EY report states that for local governments, the most suitable tax base is considered to be real property, which is immobile and can readily be identified within the boundaries of a given jurisdiction. Entertainment, being mobile and available in diverse forms, is not a suitable base for municipal/local taxation. The situs of entertainment is important for municipal/local bodies that collect tax if the source of entertainment is within the boundaries of their jurisdiction. With the advent of modern technology, movies and films can be watched not just in cinema halls or through cable or DTH connections, but also on computers, laptops and media players.


Entertainment signals could be beamed from a satellite and receivedanywhere within the footprint of the signals, which could be the whole of the country or the continent.


At any given time, it would be difficult to determine whether the film is being watched within the limits of the municipal or local body.


Dharma Productions’ Karan Johar said, “It will be almost impossible for the film producers to estimate the tax revenues with any precision. This appears to be against the government policy of facilitating ‘ease of doing business and ‘tax certainty’ in India.”


It is believed that even though the tax would be charged and collected from the theaters, film producers are impacted by it since the producers generally enter into revenue sharing arrangements with the theaters, which are based on revenues net of any taxes applied on the admissions. They would need to know the taxes applied by each of the local bodies to determine their share in the revenue pool.


Film and Television Producers Guild CEO Kulmeet Makkar added, “The Film Guild has on numerous occasions reached out to the Central Government, Empowered committee of State Finance Minister, Parliamentary Standing Committee. However, this has not been addressed in the bill.”

Latest Reads
31st October: Genuine effort wasted

Rather late in the day, 31stOctober is a film about the Sikh genocide of 1984 in Delhi in the aftermath of assassination of the then prime minister of India Indira Gandhi. She was killed by her security guards, who happened to be Sikh. That assassination, again, is attributed to the anger of the...

Movies Hindi
TV premiere of Daniel Craig's 'Spectre' on 23 October

Movies Now is all geared up to air the television premiere of the Daniel Craig starrer James Bond movie Spectre. With Diwali round the corner, the movie will hit the TV screens on 23 October at 1 pm and a repeat telecast at 9 pm.

Movies Hollywood
Jio MAMI: Royal Stag Barrel joins Star to promote short films

The Jio MAMI 18th Mumbai Film Festival with Star has managed to involve Royal Stag Barrel Select Large Short Films to provide a platform within the short films category.

Movies Hindi
India against obstructing Fawad film; Maharashtra assures 'protection'

Even as PEMRA's ban on Indian content looms, the Indian Government has made it clear that it will not create any impediment for the release of producer-director Karan Johar’s 'Ae Dil Hai Mushkil’ starring popular Pakistani actor Fawad Khan, among others.

Movies Hindi
'Thithi' to open Dharmashala fest; to screen 45 features and shorts

A total of 45 features and shorts are to screened at the fifth Dharamshala International Film Festival (DIFF) to be held from 3 to 6 November.

Movies Hindi
New films: The business of a few lakhs

The dull pre-Diwali period has taken its toll. The films released recently as well as last Friday have fallen like nine pins. Some of these have been forced to commit hara-kiri as they would not be able to get playtime at the cinemas in peak period when the flow of star cast films is regular. The...

Movies Hindi
Bollywood supports Govt's Pak policy; pleads for ongoing projects

NEW DELHI: The Film & Television Producers Guild of India Ltd today expressed “genuine concern of all those film producers who have invested heavily in films featuring artistes from across the border.” Even as it expressed unflinching support to the Central Government and solidarity with the...

Movies Hindi
MotuPatlu: King Of Kings (3D).......Kid stuff

MotuPatlu: King Of Kings (3D) is India’s own homebred animation film featuring characters of the popular Hindi comic strip of the same name that features in Lot Pot magazine.

Movies Hindi
Competitive short film fest to coincide with Risk Development meet

NEW DELHI: A short films competition on the theme of Risk Sensitive Development for Community Resilience will be organised at the Asian Ministerial Conference for Disaster Risk Reduction (AMCDRR) 2016 being held here.

Movies Short Films

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories