Debt-ridden govt throws away Rs 1,200-cr revenue from films

Mar 07, 2014, 07:33 IST | Ravikiran Deshmukh

Cabinet moves to waive tax applicable on copyright sales and lease of movies

While the state government is struggling to scrape together funds to pay off debt and honour its commitments, the cabinet has dried up a catchment area of considerable revenue for six years.

In a cabinet meeting last week during the state legislature’s four-day session, the Democratic Front government decided to waive tax on copyright sales and lease of motion pictures from April 2005 to April 2011. If levied, the tax would add Rs 200 crore for every one of these years to the state kitty.

“The amount is substantial, as today the government is finding it tough to meet financial demands for various schemes, and is enforcing a 20 per cent cut on its annual development plan,” said a senior government functionary. The state will move a separate legislation to effect the decision during the legislature’s next session in June, sources said.

“Here, what surprised most is the government’s intention,” said sources. “The 4 per cent tax was introduced in 2002 to mop up revenue. Mumbai being a filmmaking hub with a huge presence of distributors engaged in the exhibiti-on of movies produced in Hollywood, tax collections were expected to grow every year.”

A state official not authorised to speak with the press argued that the government felt that provisions of the act were complex and weren’t being implemented in other states, either. “Besides, it is yet another tax on films in a state already levying entertainment tax on sale of movie tickets,” he said.

Government doesn’t like weighing down b-town with taxes?
Sources revealed that in 2010, the state had decided to enhance the lease tax on films by one per cent. But a former chief minister known for hobnobbing with film industry honchos was told that officials of the sales tax department were harassing producers and distributors in the guise of tax recovery.

So, he ordered senior officers not to visit producers and distributors to verify their accounts. Ever since, it’s been tacitly understood that the state government disapproves pressing for tax collections from copyright sales and lease of films, said a government functionary.

>> The 4% tax will be waived for 6 years, from 2005 to 2011
>> As a result, state will forego roughly Rs 1,200 crore in taxes
>> Decision comes even as state jerks through dire financial straits

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