The revenue department has hit upon a novel idea to check piracy in movies. From 1 March 2007, service tax will be exempt for films which are delivered in digital format, as these cannot be pirated.
The exemption, will not be available if the movie is delivered to the theatre by any physical means including compact discs.
“The department has deliberately exempted service tax to movies transferred to the cinema halls in digital format in order to check movie piracy. We have been informed that this year nearly 2,000 movies halls across the country will have the technology to receive films in digital format. Transmission in such cases is electronic — either by wire or wireless means,” a revenue department official told Mint.
In case of digital cinema, cinematograph film is transferred to a magnetic tape and thereafter converted into digital form.
Digitised content of the cinema after encryption is stored in servers and transmitted to servers located in the cinema hall.
Transmission is either through satellite or other wired or wireless mode. Digital cinema projector in the theatre decodes the signal and exhibits the cinema on the screen.
A Ficci study estimates that the Indian film industry loses almost 42% revenue due to piracy. In absolute terms, this amounts to approximately Rs2,000 crore on account of piracy, according to the industry chamber.
In another change introduced in the Budget, sale of space for advertisement in business directories, yellow pages and trade catalogues will now attract the 12.36% service tax. These were exempt from service tax earlier.