Cheaper ticket for movie-buffs if states decide to slash tax

Cheaper ticket for movie-buffs if states decide to slash tax

New Delhi: Movie-buffs can now hope to enjoy their visit to cinema halls without loosening their purse strings if the Centre succeeds in persuading states to reduce entertainment tax on films.

Minister of Information and Broadcasting P.R. Dasmunsi, who will be meeting the information ministers from all states on 19 September here, will try to convince them that entertainment tax on the films should be minimised for an unstunted growth in Indian cinema, Ministry sources said.

Depending on the location of theatre in the states, the movie-goers pay anywhere between 40% to 100% tax on a ticket, making India a “highest entertainment taxed" country in the world.

This is in contrast with other industries where excise duty is capped at 16% and service tax at 15%. Average entertainment tax rates in the neighbourhood are between 10% and 15%.

As entertainment tax is the state subject under the Constitution, every state has its own tax regime. The film industry has often complained of multiplicity and obsolete tax structure, which has been subject to the whims of each state government.

Besides a hefty entertainment tax, which nearly doubles the cost of the ticket, the film industry also coughs up 12.5 sales tax or VAT (value added tax) on the eatables and drinks sold in the intermission, 12.36 service tax on the advertising revenues, 12.5 VAT on the distributor payouts and 12.36 service tax on the property rentals.

In addition, there is a plethora of other minor taxes such as show tax, INR, property tax, advertising tax, etc. And if there is any profit left after all this, a 35% income tax on that.

Hinting at the tax reforms with respect to film industry at National Film Awards function here, the minister said it was time the government made “some contribution to boost the industry" which has been a source of revenue for the government.

Impressed with the phenomenal growth of Indian film industry without any government support, the Minister said he will also take up the issue of piracy -- a scourge of cinema all over the world -- with the information ministers of the states.

After a high entertainment tax, piracy another factor which is undermining the Indian cinema’s well rounded growth. The industry experts, including FICCI, have proposed introduction of digital technologies in the film-making to check piracy.

Expressing his concerns on piracy, the minister said the “digitalised formats" can get rid of the piracy very fast.

“I am addressing the issue and hopefully by the end of this year, I shall be able to provide a positive direction in the matter of prevention of piracy," Dasmunsi said.