BENGALURU: To help the pandemic-hit Kannada film industry, the state government has proposed to reimburse its share of GST on movie tickets that were sold during the Unlock period last year. But there is a lack of consensus over who should get this benefit, and this is delaying the scheme’s implementation.
A large section of the film industry wants the reimbursement to be given to producers, but officials and domain experts say that it should go to viewers, who pay the tax. “The implementation of the GST reimbursement is delayed because of the stalemate over identifying beneficiaries. We want representatives to discuss among themselves and come up with workable suggestions. The scheme will be rolled out once there is clarity on it,” said minister for information and public relations CC Patil, adding that he would call a meeting with stakeholders soon.
According to an estimate, the film industry has suffered losses of Rs 2,500 crore since the pandemic began. The proposed scheme will provide only minor relief: Rs 9 crore of GST is likely to be refunded. But the government has taken some other steps to help the sector cope with the crisis. It has waived the property tax of film theatres for one year. “The reimbursement amount seems small for now, but it is important in view of the policy to be formulated in the long term,” said DR Jairaj, the president of the Karnataka Film Chamber of Commerce.
The issue has revived the debate for a permanent tax reimbursement scheme, which was proposed by the Siddaramaiah government in 2017 when the GST was rolled out. Siddaramaiah, who held the finance portfolio, had announced that the state’s share of the tax, SGST, would be reimbursed in the case of Kannada films.
Before the GST system was introduced, Kannada films were fully exempted from entertainment tax as the state government’s policy was to encourage local cinema. Now, the GST Council decides the tax rates, and the Centre and state equally share the tax component. Films, irrespective of their language, attract 18 per cent GST if the ticket price is over Rs 100 and 12 per cent if it is lower than that.
“It was decided and agreed by the Congress government led by Siddaramaiah to reimburse producers as they are the investors. The implementation was delayed because of technical reasons and was put on the back burner after the government changed,” said veteran filmmaker SV Rajendra Singh Babu.
Tax experts have a different view. “Tax benefits should go to taxpayers. It amounts to unjust enrichment if sellers get the benefit instead,” said BT Manohar, a member of the Karnataka State GST Advisory Council.
