With no mention of any rollback of the draconian entertainment tax, benefits for films or filmmakers, Bollywood remains miffed with Finance Minister Arun Jaitley's budget 2016.
Why Bollywood will not be happy with Budget 2016
Mumbai - 01 Mar 2016 16:36 IST
Updated : 17:01 IST
It must be hard to be a finance minister. Like the middle child of a family, his work is always held under microscopic examination and comparison. The 2016 budget by our finance minister Arun Jaitley has earned plaudits and punnery in equal measures. Social media has been resounding in its disapproval, while business experts have nodded sage agreements to the reformative budget. But one part of the country remains exiled and ignored throughout the most important economic event of the year. Bollywood finds itself being treated as the stepchild, yet again.
To begin with, this year's budget was built on several political and economic considerations. A starkly centre-right government was doling out economic policies that were determinedly pro-left. Levies on cigarettes, cars, ownership homes, electronics and jewellery stood in contrast to rebates for farmers, agricultures and start-ups. Meanwhile, the Indian film industry remains on the sidelines with no reforms or plans suggested. For an industry that makes almost $1 billion annually, and $2 billion including its overseas revenues and rights, it seems improbable that the budget should completely ignore the film industry. For years, the industry has been raising its voices, sporadically, against the presence of entertainment tax. It is a known fact that films are a milch cow that any government would subject to a certain level of taxation to earn revenue. However, the standards for these taxes need to be determined. The differences between states regarding the amount taxed has often caused many producers to reach for their antacid pills. For instance, the state of Maharashtra levies close to 45% as entertainment tax. Meanwhile, upstate in Madhya Pradesh, the same revenue amounts for close to 67% of the entire film production cost. Regional films enjoy the advantage of having almost no taxes levied on them to support the promotion of the state language. In view of such disparity, the request of a rationalised tax structure seems moderate and necessary. This tax is not exclusive to the bourgeois rich of the film fraternity. It has a trickle down effect on everyday moviegoers as well. With a steady rise in multiplex audiences and theatres across the country, this means an unregulated increase in ticket prices.
This is not the only problem that irks producers and filmmakers. The entertainment tax is just a part of the spectrum that includes property, show, hoarding, electrical, water and value added taxes. Reports suggest that these accumulated taxes make up almost 61% of a film's expenditure. After several requests in 2014, Arun Jaitley had conceded the need for a rollback in the service tax of 12.36% payable to the government. However, this remained in the plan and never made it to the final budget anytime in the last two years. Just after the finance minister presented his budget in the Lok Sabha, actors came out voicing their disappointment at the industry being ignored, yet again. Dia Mirza said ' Unfortunately, this year too, the film industry continues to remain irrelevant for the central government. Smaller films pay a big price due to the taxes imposed and despite promises to revise film service tax and cost of exhibition, there has been no revision.' While Kailash Kher remarked that the government needs to provide some financial security to the performer ' It is sad to see that performers in India are paying such huge taxes.'
Another grouse is the irregular nature of tax exemptions on films. Films are made tax free on the base of content. However, there is no uniform standard against which these films are measured. In an interview, Kulmeet Makkar, CEO, Film and Television Producers Guild of India said ' There is no formal process to obtain such exemption. It is done on a case to case basis depending on the access the filmmaker may have with various state governments.' This makes it more financially punishing for filmmakers without 'proper access'.
In 2013, Rajinikanth, that superhuman entity, turned to the streets along with his fellow actors and producers in Tamil Nadu to protest against the entertainment tax. True to his ability, Rajinikanth was able to bring the issue to attention in the national media. 3 years hence, the issue has practically died down. Filmmakers do not seek to bring attention to the issue fearing the wrath of holier-than-thou Twitterati, on the internet and off it. In spite of the silence, the industry cannot be happy with the apathy of the government.