To tax or not to tax Bollywood movies…

An interesting story in Indian Express on UP State Government taxing Bollywood movies.

The states govt impose their own tax rates on movis tickets making them exorbitant. You only get to know the difference once you buy a ticket for a tax free movie. The govts usually free a moveie from taxes if it has some social message and so on. The govt loses revenues from such movies but it helps boost the sale of tickets for that movie.

It has so happened that UP State Govt has exempted quite a few movies in recent past. This has led to loss in tax revenue.  Moreover, there is no consistent policy of tax exemption from movies:

Officials said the government’s policy allows for tax exemption if a film has been made or adopted by the Children’s Film Society, declared best feature or children film by the Union government, won awards at an international film festival, is a documentary made by Films Division of India, has family planning as its subject matter, or has been shot in Uttar Pradesh. But what gives the government a perpetual say is the rule that a film can be declared tax-free if it finds the subject matter in “public interest”, said Additional Entertainment Tax Commissioner R P Singh. Among the 26 films that the government has, during its nearly four-year-long tenure, declared tax-free, four of them — Gattu, Krishna Aur Kans, Two Little Indians and Bhoothnath Returns — had children as their target audience.

Eight others — Dedh Ishqiya, Ya Rab, Tevar, Katiyabaaz, Jaanisaar, Masaan, Miss Tanakpur Haazir Ho and Ishq Ke Parindey — were shot in Uttar Pradesh. While the government has not made public the reason for each film’s tax exemption, according to statements released by it, Bajrangi Bhaijaan was declared tax-free because it contained the “message of humanity”. Hamari Adhuri Kahani “depicts the inner conflict and empowerment of women” while Mardani dealt with “sexual crimes against women and girls”. Drishyam was exempted because it “depicts the story of a man facing odds to protect his family”. PK, on the other hand, made it to the list after Akhilesh was reportedly left “impressed by its message”, said a tweet from the Chief Minister’s Office.

Films were also exempted from paying tax after those associated with the project met the chief minister. These cases include Kabir Khan (Bajrangi Bhaijaan), Anurag Kashyap (Masaan), Kumar Mangat and Ajay Devgn (Drishyam), Nawazuddin Siddiqui and Ketan Mehta (Manjhi The Mountain Man), Imran Hashmi and Mahesh Bhatt (Hamari Adhuri Kahani), Vinay Tiwari (Miss Tanakpur Haazir Ho) and Boney Kapoor (Tevar). 

I mean just see the list of movies and reasons for exemption. Just because an actor performs at a Govt function to please the Ministers, the movie is freed from tax. But then, what do you expect from UP govt really?

The govt has been wooing the industry to shoot films in the state:

The state government has made several efforts in the recent past to attract filmmakers to shoot their films in Uttar Pradesh by promising them subsidy. The government now plans to develop two film cities at an estimated investment of Rs 650 crore in the state. 

Well, not sure whether the govt is getting anything from all this. The Govt could be much better off if it promotes actual economic activity. This will automatically bring the movie industry to shoot as well..


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