Cine exhibitors call for tax breaks on par with hotels

Vandana Gombar in New Delhi

Come January, and the industry’s pre-budget pitch rises. This time the buzzword in the entertainment industry seems to be parity. Cinema owners of the country have sought tax exemptions at par with those allowed to the hotel industry.

For new cinemas being set up as greenfield ventures or through renovation or conversion of existing buildings, the industry has sought a 10 year income tax holiday. The industry has also sought waiver of stamp duty and registration fee on acquisition of premises for setting up cinemas.

Higher depreciation rates have also been demanded. “Buildings used as cinemas should also be allowed the rate of 20 per cent depreciation, in line with the hotel industry, since the cinema buildings are subject to the same wear and tear,” industry officials said said.

They have also cited more wear and tear in furniture and fixtures used in cinema buildings (vis-a-vis hotels) to ask for a higher depreciation rate of 25 per cent. For cinema equipment, a 40 per cent depreciation rate has been demanded.

On the import duty front, the cinema industry has demanded complete waiver of these duties for projection, sound and other equipment used in the industry. Currently, the basic customs duty on these items ranges from 15-35 per cent. Total incidence is further enhanced by a countervailing duty of 16 per cent and an additional customs duty of 4 per cent.

The industry has also reiterated its demand for rationalisation of entertainment tax which goes up to 100 per cent in some states. They have sought parity with “allied entertainment activities” to ensure that the taxation rate does not exceed 25 per cent of gross ticket price.

Other demands include concessional interest on debt financing and single window clearance for new projects.

Meanwhile, the industry has also extended its support to the fight against piracy and demanded an end to unauthorised screening of films by the cable operators.