Tax evasion and Tollywood

What has happened to the Telugu film industry? Did they really ask the Andhra Pradesh Government to come with a module to sell cinema tickets? Quoting the film industry, the Information and Public Relations minister said that the industry majors feel that this would put an end to black marketing of tickets and avoidance of taxes.

This means that the industry has accepted that taxes are being evaded. In AP, majority of cinema halls (single screens) and many multiplexes are under the control of a handful of big-ticket film producers who have full control over the film releases and screenings. Why can't they set an example of being best businessmen, those who strictly follow the law?

If the industry bigwigs really feel that this measure would help the government in taming the industry and make them pay the taxes without any evasion, why not make it a national issue and see that there is national policy so that it would benefit the country? Why has it been suggested only for Andhra Pradesh?

The Minister also stated that the industry majors had said that it would help in controlling the menace of increasing ticket rates on day one of release of some big films. Well, who permits such a hike and who fixes those rates? It is not the public. It is the government that allows extra shows and increase in ticket rates and film exhibitors cash in on the craze of film buffs and fans associations. Why not initiate action against them?

Why can't the industry majors step in and stop this if they feel it is harmful for moviegoers and the state exchequer? The Film Development Corporation Managing Director T V K Reddy told a news agency that the proposal that government take over sale of movie tickets was basically to prevent tax evasion. Is the film industry ready to accept that all these years they have been evading taxes? If so, what is required first is to take legal action against all those who had avoided taxes.

The government needs to carefully examine the proposal and see if there is really a need for them to get into such a business. Already there are private players who are into online sale of cinema tickets. According to statistics available online booking accounts only for 15 to 20 per cent of the total sales of the movie tickets. Even if we presume that tax evasion is taking place, the volume is not much and measures to curb tax evasion can be taken up.

The so-called convenience or Internet-handling charges is another point that is being spoken about in support of the proposal for government to take over the business. But the handling charges are collected even by government departments. The Discoms, corporations etc charge handling charges for paying of electricity bills or property taxes etc. Similarly, a nominal handling charge is levied for online ticket sales.

The entertainment tax is levied by the government on commercial shows, movie tickets, sporting events, music festivals etc. But that too has now been replaced by GST. So, if tax evasion is taking place where is it happening? It would be more pertinent to investigate such aspects and take corrective measures rather than take over the sale of online tickets.