The Hindu Business Line : Taxes on entertainment sector `a tragedy'

Already reeling under the impact of issues such as anti-piracy and increasing success of dubbed Hollywood movies as well as `Hinglish' movies, the industry has sought relief on tax-related issues from the Government.

In its pre-Budget memorandum, the Federation of Indian Chambers of Commerce and Industry (FICCI) has sought a re-look at the provisions for the tax-related issues concerning the industry. The Chamber said that currently, the Income-Tax Act provides for levy of interest on instalments when the specified percentage of advance tax is not paid on the relevant due dates.

"However, in the case of the entertainment industry, it is very difficult, if not impossible altogether, to go by the previous year's turnover or estimates to pay advance tax for the period prior to the films release," the chamber said.

Currently, the assessing officers charge an interest on delayed payment of advance tax, FICCI pointed out. The industry has requested that it would be fair if the provision be suitably amended to provide that in case of entertainment industry, the producer shall pay the entire advance tax payable from the quarter of the release till March 15 of the financial year.

It further urged the Government to treat the entertainment software differently from the other manufactured articles and similar to IT software. "There is a strong case to remove excise duty on compact discs (CDs) as they too are a medium for carrying software," the chamber said.

Keeping in mind the emerging popularity of multiplexes, the industry has urged the Government to extend the tax holiday to the multiplexes set up in the four metros — Delhi, Mumbai, Kolkata and Chennai.

Elaborating further, the chamber said that tax holiday proposed under the Income-Tax Act is to be given to only those multiplex projects that are outside the municipal jurisdictions of these metros.

"It should be appreciated that the rationale for providing this tax holiday is to induce investments in this sector, and help business become viable by offsetting the prohibitively high capital cost and entertainment tax levels. This rationale is even valid for metro cities," it said.

Besides, the real estate in these cities is much more expensive than other areas, hence, there is a stronger case for providing tax holiday to those multiplex projects which are situated in metropolitan cities.

The chamber further said that the buildings used as cinemas must also be allowed a higher rate of depreciation at 20 per cent as in the case of hotel industry.

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