TAX FREE FILMS
Haryana, Gujarat, Madhya Pradesh, Goa, Karnataka, Tripura, Uttar Pradesh, and Uttarakhand, have declared the Kashmir Files movie tax-free.
WHAT QUALIFIES A FILM TO BE DECLARED TAX-FREE?
- There are no fixed criteria for a film to claim or enjoy tax exemption
- Decision to give up its claim on tax revenues is taken by state governments on a film-by-film basis, and on the particular government’s assessment of the importance of the issues that the film deals with.
- As a general rule, when a film deals with a socially-relevant and inspiring subject, state governments may at times exempt it from tax with the intention of making it accessible to a wider audience.
Exactly how much cheaper is it to watch a film that is tax-free compared with other films?
- Before the Goods and Services Tax (GST) came into effect in 2017, state governments levied entertainment tax, which varied from state to state, and was higher in states like Maharashtra and Uttar Pradesh. When a film was declared tax-free, the entertainment tax was waived, making tickets significantly cheaper.
- In the GST regime, movie tickets initially attracted a GST of 28 per cent. Subsequently, two slabs were introduced — 12 per cent GST on tickets costing less than Rs 100, and 18 per cent on more expensive tickets. The revenue is shared between the central and state governments
- So when a state declares a film tax free now, only the SGST component is waived, while the CGST continues to be levied. Depending on the ticket price, the exemption could be 6 per cent or 9 per cent.
- Filmmakers look at a tax free tag as an endorsement from the government, and a boost to the film’s image and publicity, even if it does not make a huge difference to the money that the film makes.
Which other films have been made tax free in the country?
- Traditionally, widely-acclaimed and significant films such as Gandhi (1982), used to be declared tax free.
- In 2016, two socially relevant films, Dangal and Neerja, were made tax free in several states.
- Among the other films that have been made tax free in several states in recent years are Toilet: Ek Prem Katha (2017), which backed efforts to stop open defecation; Chhapaak (2020), the story of an acid attack victim’s fight for justice; Mary Kom (2014), the biopic of the world champion and boxing legend; Taare Zameen Par (2007), the story of a dyslexic child; Mardaani (2014), which is about a policewoman’s fight against human trafficking; and Nil Battey Sannata (2015), a feelgood film about the power of hope