Filmed entertainment industry wish list for Budget 2008

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MUMBAI: Budget 2008 is just around the corner and as usual expectations are high from professionals in the media and entertainment industry.

While some sectors of the entertainment industry are bullish about the government’s plans to bring about structural changes, some others have long made their peace with the step-motherly treatment meted out to the sector keeping the past budgets in mind.

Notwithstanding that, the Hindi film industry, which is projected to grow to Rs 107 billion this year, eagerly anticipates tax sops and more from the budget this year.

Last year, the budget’s impact was marginally positive for the industry with reduction of the customs duty on digital cinema infrastructure equipment from 12.5 per cent to 7.5 per cent. However, the 12.5 per cent service tax has affected the entire value chain – from distributors to multiplexes.

This year the industry’s demand is to exempt excise duty for set top boxes, lower the import duty for hardware equipment and make efforts to standardize entertainment tax, which is state subject.

Businessofcinema.com asks the industry what it expects:

Balaji Motion Pictures CEO Ramesh Sippy

There are no expectations, we can only pray! My major contention is the tax system. There is lack of uniformity within the country itself. We are supposed to comply with the service tax and then VAT. The General Service Tax will be out by 2010, so why not wait till then and impose one tax instead of bombarding us with two separate taxes?

Delhi has done away with the VAT system, whereas it still prevails in Mumbai. There is so much confusion, which in turn results in a messy situation. Our Finance Minister should consider this state of ours and take the film industry seriously. One feels that we don’t contribute to the GDP or have a minimal fraction in India’s economy. But it is not that. Leave aside the GDP; we will be increasing cross-culture programs, tourism and a lot more things.

Prime Focus Limited managing director Namit Malhotra

As entertainment and media companies like us expand their operations and create content globally, complex tax issues can act as a drag on their operations and depress profitability. From the Budget 2008-2009, the entertainment industry is bullish about the government’s plans to bring about structural changes in the sector, thereby catapulting India to the top league of the global entertainment space.

Our expectations from this year’s budget remain relatively the same as last year, whereby we would like tax holiday for the Indian film and entertainment industry. Just like in IT and ITES, we would like for special tax concessions towards facilitating greater exports from India. This would help in strengthening the future potential and opportunities for the media sector, which is at an inflection point.

According to PricewaterhouseCoopers (PwC) Global Entertainment and Media Outlook, India is ranked as the fastest growing market in the world for spends in entertainment and media in the next five years. India will be one of the key drivers in pushing the global entertainment and media industry to $ 2 trillion by 2011.

Moser Baer Entertainment chief executive officer Harish Dayani

The entertainment sector remains largely untouched by the Budget. If we really want the Finance Ministry to do something for the entertainment sector, it is time the industry should come together and make some noise collectively. The only thing I wish for is that there should be uniformity in entertainment tax across all states in India. The tax ranges from 10-60 per cent now, which is unfair. The ministry should make it uniform, be it at 20, 30 or 40 per cent.
 
INOX Leisure Ltd chief operating officer Alok Tandon

The multiplex industry is one of the most highly taxed industries today. In the last budget a service tax of 12.36 per cent was levied on multiplex rentals, which is quiet high considering the real estate prices today.

Multiplexes are already taxed on both top line and bottom line; the introduction of service tax over and above that has placed a huge burden on multiplexes. On behalf of the multiplex industry I would request the finance minister to reconsider it.

Adlabs chief financial officer V. Devrajan

I am strongly not expecting any changes in the tax structure; it can’t change – considering the fact that this is the election year. The number of taxes levied has only been on an upward graph; something needs to be done on that front. Additionally, the service tax needs to be outdone. However, that is a far-fetched wish. We can only expect the finance ministry to be thoughtful of the entertainment industry.

PVR Cinemas chief financial officer Nitin Sood

The service tax of 12½ per cent imposed last year is a big issue for the entire retail sector and for multiplexes. We hope appropriate measures are taken for its withdrawal. Also, there should be a reduction in the custom duty rates for import of equipment such as projection systems. There is lobbying in entertainment tax across the country. Although it is a state affair, the Central Government had said the tax rates will down, like in west, but this is not much in the Budget purview.

Cinemax chief financial officer Jitendra Mehta

We look forward to rationalization and uniformity of entertainment tax. This is a state subject but appropriate guidance from finance minister can expedite the move. We also look forward to extending benefit under 80IB section of income tax act available to multiplexes. We look forward to removal of corporate surcharge, rationalization of tax rate and slabs, rationalization of Fringe Benefit Tax (FBT) and reduction in dividend distribution tax. We await abatement of 67 per cent for service tax on rent so that effective tax rate reduces to per cent.