The Hindu Business Line : Music cos want to be treated on par with other IPR industries

THE heralding of the uniform value-added tax (VAT) regime may not be sweet to the ears of the beleaguered music industry. With just a couple of months left for the implementation of the VAT, the music industry is stepping up pressure by asking the Government to categorise it at par with other intellectual property rights (IPR) industries.

Currently, the music industry is categorised under the revenue neutral rate (RNR) category wherein a tax rate of 12.5 per cent would be applicable. According to Mr V.J. Lazarus, President, Indian Music Industry (IMI), "If the tax rate is not rationalised, prices of CDs and music cassettes could go up by 8-10 per cent. This would be contrary to the trends seen in the last few years where there has been a steady decline in prices."

Representatives from IMI as well as the workers union met the Chairman of the empowered committee on VAT, Dr Asim Dasgupta, on the issue. The industry is also taking refuge under a recent Supreme Court ruling, which clearly stated, "We see no difference between the sale of a software programme on a CD/floppy disc from a sale of music on a cassette/CD or a sale of film on a videocassette/CD. In all such cases, the intellectual property has been incorporated on a media for purposes of transfer. Sale is not just of the media which in itself has very little value."

The music industry has seen a drop in turnover from Rs 1,000 crore in 1996-97 to Rs 450 crore in 2003-04. "If the industry is classified at par with other IPR industries, it would attract a tax rate of 0-4 per cent," said Mr Lazarus.

In a representation to the Finance Ministry, the Federation of Indian Chambers of Commerce and Industry (FICCI) has stated that the Budget 2005-06 should reclassify VAT for music industry at par with other IPR industries. Besides, the chamber has also urged for working out a procedures to counter piracy at the manufacturing end of the business.

Recommending implementation of the international SID Code, which helps trace CDs to the plant from where they are manufactured, FICCI said that a cess of 20 per cent be imposed on those plants which are not using the SID Code.

Besides, all entertainment companies buying/using CDs without SID Code should also be subjected to the cess, the chamber stated.

It has also urged for imposition of 20 per cent cess by the Customs department on blank CDs being imported from Taiwan and other countries, which have a direct impact on piracy.

In fact, an anti-piracy task force similar to the Central Industry Security Force can be created for the purpose, FICCI said.

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