With the Goods and Services Tax (GST) legislation facing further delays, Bollywood/ Film Industry is hoping for the government to pay heed to its demand and include the entertainment tax collected by local bodies in the proposed indirect tax system. The GST Bill, in its current form, allows local bodies such as panchayats and municipalities to levy and collect the tax. This tax would be above the state and central GST on entertainment.
The Film & Television Producers Guild of India has urged the government to fully subsume local bodies’ entertainment tax under the proposed GST. Its concern isn’t about the money involved, which isn’t too much, but the difficulties in dealing with hundreds of local bodies.
“The film guild has on numerous occasions reached out to the central government, the Empowered Committee of State Finance Ministers and the Parliamentary Standing Committee. However, this (demand) has not been addressed in the Bill,” said Kulmeet Makkar, chief executive of the guild.
Local body entry tax -such as octroi -is estimated at, 14,000 crore a year for Maharashtra alone and it has been fully subsumed in the proposed GST. However, local body entertainment tax, estimated at 25-30 crore across India, has been kept out, allowing these local bodies to charge an incremental entertainment tax over and above GST, said people in the Bollywood industry. They want this tax to be subsumed in GST as it will make tax compliance easier for an industry that is a cultural representa tive of the country.
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“Internationally, films are considered the cultural ambassdors of their country and offered incentives and financial support by governments around the world. Films should be treated on par with other services and not be singled out for additional en tertainment tax,” said Mukesh Bhatt, president of the guild.
For GST to truly benefit the media and entertainment industry (of which films are a part), “it needs to be `complete’ -entertainment tax levied by local bod ies must be subsumed; `clear’ classification of intangibles and applicability of place of supply rules needs to be evaluated; and `easy’ -compliance must be inexpensive as collection procedures are harmonised across states,” said Sudhanshu Vats, group CEO at Viacom 18 and chairman of the CII National Media and Entertainment Committee.
An EY report, titled `Subsume entertainment tax in GST’, states that supplementary levies in addition to GST are warranted only for products that are harmful to health (such as tobacco and alcohol), or those that are detrimental for the environment (petroleum).
“Entertainment taxes were being primarily imposed by the state governments. While such statelevel entertainment taxes were subsumed within the GST, entertainment taxes levied by local bodies inexplicably are not proposed to be subsumed.