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DTH services, IPL matches brought under entertainment tax net
October, 07th 2011

The State government has brought Direct To Home (DTH) services and cricket matches organised by Indian Premier League (IPL) into the entertainment tax net.

Theatres will have to pay double the tax on every film screen for each ticket but cinema goers will not bear the brunt.

A Bill passed by the Assembly on Wednesday included DTH services and IPL cricket matches within the definition of the term entertainment to levy tax under Tamil Nadu Entertainments Act, 1939.

The six companies providing DTH services in the State will have to pay 30 per cent of gross charges as entertainment tax, excluding service tax, to the government, based on their subscription base.

If the DTH provider charges Rs.100 for a connection, then the company will have to pay Rs.30 as entertainment tax. This is excluding sales tax, an official explained.

Officials promised that customers would not be charged but were apprehensive that the DTH provider could pass on the burden to them.

Doubts were raised in a few other States claiming that DTH was a Central service and questioning how States could levy entertainment tax, and there has been litigation. As of now, court verdicts have favoured the State governments' classification of DTH under entertainment, officials explained.

Bringing the highly successful IPL into the tax net, the government has chosen to levy 25 per cent of the payment for admission, inclusive of the amount of tax, to any of the cricket matches. For instance, if a ticket costs Rs.1,000, then the organisers would have to pay Rs.250 as entertainment tax, officials clarified.

About half-a-dozen States have drawn the IPL into the entertainment tax net.

The government hopes to net Rs.100 crore annually by bringing DTH services and IPL matches under tax net.

It has increased basically doubled the rate of tax for admission to any cinematography exhibition in a theatre under Tamil Nadu Entertainment Tax (Second Amendment) Act, 2011.

At present, it charges 15 per cent from ticket charges as entertainment tax for new films screened in the 10 corporations and 22 municipalities. The tax is 10 per cent in other areas. For screening of old films, it is 10 per cent tax throughout the State.

After the passing of the Bill, which came into force at once, the tax rate in corporations and municipalities for screening new films has doubled to 30 per cent. For new films screened in other areas and for old films, the entertainment tax has doubled to 20 per cent.

However, this will not affect cinema goers as there is a cap on ticket charges, officials said. In Chennai, multiplexes could charge only Rs.120.

Now theatre owners would have to pay 30 per cent, Rs.36 per ticket, instead of Rs.18 they were paying till now, as entertainment tax. But, theatres would not be able charge the customer more because of the cap.
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