In Andhra, VAT on film distribution

Meher Khanna - Televisionpoint.com | Hyderabad
In a major decision, the Andhra Pradesh government, for the first time, will extend the value added tax (VAT) to distribution of films.

The government will introduce a slab system varying from Rs 5,000 per print to Rs 50,000 depending on the film's budget. Film processing labs will be made the tax realisation points from where producers will be allowed to take prints only after getting a no due certificate from the VAT authorities.

Official sources informed that the Chief Minister, Dr Y. S. Rajasekhar Reddy, will make an announcement on the slab system at the Nandi awards function next week.

After several rounds of talks between representatives of film industry and commercial taxes minister, K. Ramakrishna, a consensus to levy tax on distribution of films was arrived at.

Sources said the commercial taxes department proposed a higher rate of taxation, but the government decided not to be harsh with the industry apparently keeping in view several factors during the polls season.

Though film distribution is exempt from the erstwhile sales tax Act the provision got automatically scrapped in VAT. The commercial taxes department, however, did not levy tax on film distribution till the vigilance and enforcement department pointed out the inaction.

"It will be difficult to levy tax either on the production cost or the amount for which the distribution rights are sold because both values are under shown," a senior commercial tax department official pointed out.

Ramakrishna was believed to have suggested imposition of tax on each print and insisted that the amount should be paid only in cash besides linking it to the release of the film.

Noted film producer D. Suresh said the burden will not be passed on to the film goers.