By R.G. Vijaysarathy, IANS
Bangalore : A Supreme Court judgement calling for uniform entertainment tax for feature films in Andhra Pradesh may have far reaching box-office consequences for Kannada and non-Kannada films.
Kannada filmmakers say it may discourage films in their local language and result in job cuts for writers and technicians in the state's movie industry.
Sa Ra Govindoo, vice president, Karnataka Film Chamber of Commerce, told IANS: "If the tax application is the same for Kannada and non-Kannada films, it will certainly affect the revenues of Kannada films.
"Though all Kannada films, except the A certificate (adult) films, will be getting the same subsidy amount in future, it was the full tax exemption which gave impetus to the filmmakers to make quality films."
The debate began when Production house Ashirwad Films approached the apex court, challenging the validity of the Andhra Pradesh Entertainment Tax Act 1939, under which the rate of entertainment tax on Telugu films was fixed at 10 percent while on non-Telugu films, it was 24 percent.
Some had argued that high entertainment tax for the films dubbed in Telugu was unfair and contravened constitutional provisions, which do not allow any discrimination on the basis of language.
Earlier this month, the Supreme Court said that taxing statutes, like penal statutes, should be clearly laid down and cannot be arbitrary. It said there should be uniform taxation on all the films released and that there should be no discrimination on the basis of the language of a film.
Based on this rationale, a bench comprising Justice S.B. Sinha and Justice Markandey Katju struck down the higher rate of entertainment tax being imposed by Andhra Pradesh on films produced in languages other than local ones.
The judgment might affect the selective tax concessions extended to local language films in Karnataka as well.
Though the Karnataka government has not immediately reacted to the judgement, it is clear that the present policy of full tax exemption to Kannada films may not continue for long.
The ticket rates for Kannada and non-Kannada films may also be the same in the future.
Well known producer and distributor K.C.N. Kumar said: "Kannada films need some encouragement" in the state because they are facing stiff competition from non-Kannada films.
"In Karnataka, there has been a history of non-Kannada films enjoying a good patronage from film viewers," he told IANS.
"Kannada films have a limited market and even in the state of Karnataka there are many areas where non-Kannada films will get priority allotment in theatres. Tax exemption has helped the Kannada film industry grow and expand.
"Therefore, it is better for the Karnataka government to look at alternative avenues if the same tax slab is applied to both Kannada and non-Kannada films," he added.
Uniform tax would also mean that many restrictions on production of Kannada films would have to undergo a change.
For example, tax exemption is applicable to films based on original stories or on remakes (if the original film was made ten years ago) of other language films. Now, there is more number of remade films. This may also result in job cuts that would directly affect the writers and technicians.
Tax exemption is also made for films that are entirely made in Karnataka, with the exception that if a small portion of the film is shot outside the state, it had to be permitted by the Information Department.
Uniform tax application may well mean that many producers can now go to the studios of other states to shoot their films and for post-production activities. This will also provide less job opportunities for local talent and a drastic reduction in the use of local technical equipments.