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Kannada film industry owes Rs. 175 crore in VAT

Kannada film industry owes Rs. 175 crore in VAT
The whopping tax arrears that the Kannada film industry owes to the government is giving sleepless nights to film producers. The producers are also worried about the imminent action by Employees’ State Insurance Corporation (ESIC) authorities against them for not enabling workers to avail of medical benefits.

While the Commercial Taxes Department has started issuing notices to film producers asking them to pay value added tax (VAT) on the sale of satellite rights and audio rights of films produced by them, the ESIC too is cracking the whip against them for not enabling film workers to avail of benefits of the scheme.

According to S.V. Rajendra Singh Babu, chairperson of Karnataka Chalanachitra Academy, producers owe nearly Rs. 175 crore in VAT to the government.

Supplementing claims of Mr. Babu, president of the Karnataka Film Chamber of Commerce (KFCC) Thomas D’Souza regretted that though successive governments in the past 10 years had “orally” promised to waive VAT for film industry, they had failed to keep their word.

“In the light of the department slapping notices on a few producers, an emergency meeting has been convened after Sankranti to discuss the issue and impress upon the government on the need to waive VAT,” Mr. D’Souza said.

Mr. Babu, who took a delegation of producers to the Finance Secretary recently, said authorities had expressed helplessness on the issue on “technical grounds”.

Describing the issue as a “sword of Damocles” hanging over the Kannada film industry, he said, “producers may resort to extreme step, if the government insists”.

A film producer on condition of anonymity said if the government took a firm stand on recovering VAT, everyone from lyricist to a dialogue writer would have to pay tax for copyrighted works created between 2005 and 2014.

Mr. D’Souza said since the introduction of VAT in 2005, the “crisis-ridden” Kannada film industry had been apprising all the Finance Ministers on its inability to pay VAT. “But, we got only oral assurances. We will make a firm move this time as there are a few representatives of the film industry in the government,” he said.

Karnataka Film Chamber of Commerce will meet after Sankranti and try to impress upon the govt. on the need to waive VAT

Thomas D’Souza , 
KFCC president

Notices issued to producers asking them to pay VAT on the sale of satellite rights and audio rights of films

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