“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. To add to their spirit of celebration, I propose to exempt the industry from service tax on copyrights relating to recording of cinematographic films.”
– Excerpt from Union Finance Minister Pranab Mukherjee’ Budget Speech
As Finance Minister, Pranab Mukherjee rose to present the 2012-13 Union Budget in Parliament yesterday, one watched the proceedings with a fair degree of disinterest and cynicism – accustomed as we are to the film industry routinely getting a cold shoulder in the Finance Bill.
It was thus a hugely pleasant surprise when Mr Mukherjee announced that copyright on cinematograph films would be exempted from service tax – something the industry has been earnestly demanding for quite some time and even threatened to go on strike over. The proposed exemption should be of great help, particularly when it comes to freeing up cash flows through the production-distribution-exhibition value chain.
Another move that could help infuse fresh funds in the industry is the opening of the venture capital sector. At present, VC investments are permitted only in nine specified sectors and the liberalised norms proposed in yesterday’s Budget should help attract investments in the Media & Entertainment sector.
Other than these measures, at first glance there doesn’t seem to be much else to rave or rant about in the Union Budget from the trade’s point of view. However, one really needs to go through the exhaustive fine print of the voluminous Finance Bill to see if there are any hidden bonanzas or googlies lurking in there for us.
That said, given our industry’s track record in managing to getting its voice heard by the powers-that-be – something we had spoken about in our note on this page last week – it is indeed heartening to see that the Finance Ministry has for once heeded our appeals on the issue of service tax. And for that, a huge ‘Thank You!’ to Mr Mukherjee and his team!
P.S. In his speech, the Finance Minister did mention that the service tax exemption was to commemorate the beginning of the centenary year of Indian cinema. I hope he isn’t indirectly telling us that that the next time we can hope to get some budgetary relief will be in the year 2112!