In a welcome birthday gift for Indian cinema on the occasion of its centenary year, Finance Minister Pranab Mukherjee has given in to a long-standing demand and exempted it from the service tax net.

The entire entertainment and amusement services industry has been placed in the negative list of sectors which are not required to pay the tax. Finance Minister Pranab Mukherjee also specifically stated that service tax would not be charged on film copyrights.

“The Year 2012 marks the beginning of the centenary year of Indian cinema. Despite the change in titles from Dada Saheb Phalke's Raja Harishchandra to Ra.One in recent times, the industry has played a pivotal role in unifying our country in the wake of her considerable diversity,” Mr. Mukherjee said to considerable applause from Lok Sabha MPs. “To add to their spirit of celebration, I propose to exempt the industry from service tax on copyrights relating to recording of cinematographic films,” he said.

The film industry, which had gone on a one-day strike last month to protest against the government's move to slap a 10.3 per cent service tax on it, welcomed the Minister's move.

“Ours is a struggling industry. This will give us some desperately needed relief,” said Film Federation of India president Vinod K. Lamba, also giving credit to Information and Broadcasting Minister Ambika Soni who championed the cause of filmmakers, leading a delegation to Mr. Mukherjee in the run-up to the budget.

Filmmakers and theatre-owners threatened to go on an indefinite strike this month if the budget did not accommodate their demands, pointing out that State governments already taxed the industry extensively – up to a maximum of 67 per cent.

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