Bollywood blues: Is film industry overtaxed?

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Rika Aash: Mumbai/New Delhi, Mar 01 2013, 17:40 IST

Bollywood blues: As per the KPMG Media and Entertainment report 2012, the Indian film industry is expected to grow at a CAGR (Compound Annual Growth Rate) of 10.1 per cent and touch INR 150 billion in 2016 but according to insiders, the industry is currently plagued with several taxation problems that are severely hindering its economic growth. As the Finance Minister gears up to announce the Union Budget 2013-14, here’s a lowdown of the issues that industry faces:

Multiple taxation as opposed to Goods and Services Tax (GST)

All stakeholders involved in the film-making process, including producers, distributors, exhibitors, actors and other technicians face the problem of multiple taxation. But those most affected by multiple taxes are producers, actors and technicians. Apart from Income tax and TDS (Tax Deduction at the Source), the producers, actors and technicians also have to cough up indirect taxes in form of the service tax levied at 12.36 per cent. While actors were not liable to the service tax previously, they have been brought under its purview from July 2012. This introduction has led to several protests from the producers as they would now have to shell out additional fees to the actors. Santosh Dalvi, Partner-Indirect Taxes, KPMG, says, “The actors will now include the service tax levied on them in their invoices and collect the tax amount from the producers and remit it to the government.” While earlier the producers could redirect this tax in the form of a license fee charged on the film’s copyright,

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