Service tax on film actors is here to stay

Updated - December 04, 2021 11:16 pm IST

Published - March 01, 2013 03:57 am IST - CHENNAI:

The film industry’s single-point wish list for a rollback of the service tax levied on actors has not been met with in the Union budget.

The demand had taken centre stage over two protests in January — first by the Tamil film industry in which senior actors, including Rajinikanth, had participated, and later by the Hindi film industry too. They had said the 12.36 % service tax on actors that had been levied since July 2012 was a huge burden being transferred on to producers. Rajinikanth had warned that continuing with the ST might even lead to black economy.

In his budget speech, the Finance Minister noted: “Last year, at the request of the film industry, full exemption of service tax was granted on copyright on cinematography. The industry has now requested to limit the benefit of exemption to films exhibited in cinema halls. I propose to accept the request.”

“As usual the film industry has been left in the lurch,” said Ravi Kottarakara, vice-president of the Film Federation of India. “The levy of ST on actors inflates the production costs exorbitantly. Nearly 60 per cent of the production costs of any film go towards remuneration of actors and technicians. We were hoping for a partial rollback if not a complete exemption.”

The budget announcement has also been met with some ambiguity. “There never was a service tax component to films exhibited in cinema halls,” G. Dhananjayan, Chief — South Business, Studios, said.

To hit producers

Mr. Kottarakara said the government decision to levy service tax on temporary transfer of rights — for video and for satellite rights — would affect the individual proprietary producers more than the corporate studios that were listed in the stock exchanges.

“Some of these changes come across as favouring the corporate houses. But the fact is, more than 80 per cent of the film producers are individual proprietors. They cannot bear this sort of taxation,” he said.

“The same is the case with actors who have a very short shelf life these days in the industry. Most of them earn their fortunes over a period of four or five years and fade away. The 12.36 per cent service tax is going to break the producers.”

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