Budget Wishlist | Exempt films from VAT, service tax : Assocham

Budget Wishlist | Exempt films from VAT, service tax : Assocham
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First Published: Fri, Feb 22 2008. 12 55 PM IST

A passerby taking a look at a poster of a Hindi movie. Assocham has also sought infrastructure status for the film and entertainment industry under the Income Tax Act, 1961
A passerby taking a look at a poster of a Hindi movie. Assocham has also sought infrastructure status for the film and entertainment industry under the Income Tax Act, 1961
Updated: Fri, Feb 22 2008. 12 55 PM IST
New Delhi: Move the film industry to the Concurrent list from State List, enact Optic Disc Law, remove value added tax (VAT) and service tax and confer a de-facto industry status on it are some of key proposals mooted by The Associated Chambers of Commerce and Industry of India (Assocham) for the government’s considerations in budget 2008-09.
In a memorandum submitted to the I&B and Finance Ministries, Assocham president Venugopal N. Dhoot proposed immediate enactment of Optic Disc Law to combat increasing video, cable and TV piracy and amend the existing Copy Right Act which does not adequately prevent piracy both in print and electronic media.
The Assocham chief pointed out that it has become necessary to bring in entertainment industry under the concurrent list so it can also be monitored by central rules and enjoy certain tax concessions announced by the Union Government from time to time.
A passerby taking a look at a poster of a Hindi movie. Assocham has also sought infrastructure status for the film and entertainment industry under the Income Tax Act, 1961
Currently, the entire entertainment and film industry falls under state governments jurisdiction, as a result of which, it has not been able to enjoy the already conferred dejure industry status on entertainment and film industry. Retaining the industry in the state list, certain matters concerning the central government cannot be taken up with the Union Ministry, besides the tax concessions.
The Chamber has also pointed out that in the Finance Act of 2007, service tax has been made applicable in case of renting, leasing, letting immovable properties which include theaters, exhibition halls and multiple use building with the result that the central excise departments has issued notices for recovery of service tax from entertainment industry.
As the film industry is already burdened with various types of taxes and fee imposed by state governments and local self governments, the central government is persuaded to exempt the transactions between producers and distributors.
As regards to VAT, Assocham has pointed out that the film and entertainment industry, the VAT imposed is at the rate of 12%, which is too high and since no cine goers is supposed to pay it, the tax should be waived off as producers are put under heavy burdens and if waiving off of this VAT is not possible, its rate should be brought to 4%.
The Chamber has also reiterated that infrastructure status should also be conferred on film and entertainment industry under Section 10 (G) 23 of Income Tax Act, 1961.
Dhoot also said that amendment to be made in Cable TV Networks Regulation Act 1995 and state governments be authorized and empowered to grant licenses to the applicants as cable operators for which purpose the states should vest its designated officers with such powers so that on their violation, the licences can be cancelled.
The enactment of Optic Disc Law as suggested by Assocham would meaningfully combat video, cable and TV piracy. Such a law has produced very encouraging results in the neighbouring countries such as Malaysia, HongKong and the like and hence, the need for immediate enactment of such law in India.
The Assocham chief has complimented the government, particularly the I&B Ministry for setting up of five core groups on piracy, technical issues such as taxation and custom duties, Exports of films and related issues, promotion, development and marketing of films, both current and archival, and on film festivals in India and abroad, hoping that their recommendations which have already been submitted would be considered by the government.
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First Published: Fri, Feb 22 2008. 12 55 PM IST