Satakarni tax sops not reaching audience

​Hyderabad: Movie goers in the two Telugu states are being taken for a ride by exhibitors screening the Balakrishna-starrer ‘Gautamiputra Satakarni’, which has been doing well at the box office.

The governments of Telangana and Andhra Pradesh have exempted the historical film from payment of entertainment tax.

However, the exemption came with what is seen as a strategically vague rider that the rates of admission fee for the movie shall not exceed 75 percent of the existing notified rates of admission fee to each class of the theatre.

As is their wont, the exhibitors, in gross violation of the condition, have been collecting normal rates of admission from movie goers without passing on the benefit of tax exemption.

Sources in the Commercial Tax Department told The Hans India that in such cases, the exhibitors would claim tax exemption subsequently while filing returns and thereby pocket the entire money collected from moviegoers towards the entertainment tax.

About 1,200 theatres – small and big – operating in the two Telugu states are under the control of four ‘big shots’ of the film industry.

The benefit of exemption of entertainment tax goes directly to them, the sources said. The sources said that the Telangana government did not even issue an order exempting the film from payment of entertainment tax. Instead, the government has given instructions to the department that are “very vague”.

Taking advantage of this, the exhibitors continue to sell the tickets at normal notified rates and collect 15 percent entertainment tax from the viewers. The entire tax amount so collected would eventually be pocketed by the four big shots, sources said.

A judicial activist, CVS Raghunatha Rao, told The Hans India: “Some people in the film industry are resorting to financial irregularities causing a huge loss to the exchequer and also fleecing the common people.” There was no point in giving tax exemption to big budget films, he said.

“It is nothing but helping the producers and the exhibitors’ mafia to fleece the people and also evade tax,” he said. These people were making hundreds of crores by evading taxes, he added.

“I am aware of this and I have already written to the government to clarify on the rates of admission fee to be collected by the exhibitors. The instructions given in this regard are not clear,”
Commissioner of Commercial Taxes, V Anil Kumar, told The Hans India. He said that the exhibitors should not collect entertainment tax from the consumers if the government had exempted entertainment tax.

Asked about the steps taken by the department in connection with the Telugu feature film ‘Rudrama Devi’ (for which the Telangana government had granted exempted from entertainment tax), Anil Kumar said they needed to verify the returns filed by the exhibitors.

Reacting on this, judicial activist Raghunatha Rao said, “By the time the government gives clarity, the exhibitors would have fleeced the people and pocketed the money collected towards entertainment tax.”

The Telangana government has not even issued a GO. This is only to favour the producers and the exhibitors because they will subsequently claim tax exemption at the time of filing returns with the help of instructions, thereby denying the benefit to consumers and also causing loss to the exchequer. “I will approach the courts for justice,” Raghunatha Rao said.