India Insight

Bollywood seeks tax breaks from Budget 2014

By Shashank Chouhan and Sankalp Phartiyal

Bollywood is hoping that the newly elected government’s first budget will contain tax breaks that will let it write a happy ending, at least for this year and next.

The Indian movie business, led by the Mumbai-based Hindi film industry, hopes Finance Minister Arun Jaitley’s budget will reduce the tax burden on movie studios as well as theatre owners and operators, and will provide incentives that would let them open more theatres around the country to boost ticket sales.

While the entertainment tax on movie tickets varies from one state to another, filmmakers pay numerous other fees, such as a 12.36 percent service tax to the central government that is charged on payments to actors and film crews, as well as customs on any imports such as movie equipment. This, industry insiders say, makes it tough to make more money. In Maharashtra, Bollywood’s home state, the taxes on a movie can comprise up to 61 percent of a film’s budget.

“You need to treat us fairly, not penalise us because you feel we are just entertainers. We want to be treated at par with any other service industry,” said Kulmeet Makkar, CEO of the Film & TV Producers Guild of India Ltd.

Makkar said he hopes the government will roll out a Goods and Services Tax that would replace all major indirect taxes and simplify the tax structure.

How the Bollywood numbers game works

On Nov. 23, along with its usual glut of interviews and news about Bollywood stars, the Bombay Times featured a solemn announcement: “Box Office column discontinued.”

The column, written by Priya Gupta, editor of Times of India Metro Supplements, said it was getting increasingly difficult to get good numbers for how films are doing at the box office because filmmakers and production houses “jack up their numbers.”

“While filmmakers have no hesitation in picking up the phone and trying to convince us about their false data, they will not send formal emails confirming the data as they are scared of subsequent expose,” the column said.

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