Maharashtra government on Wednesday exempted transfer of copyrights of a film -- relating to the exhibition in theatres -- from VAT.

This was announced in the Legislative assembly during the State budget presentation, Deputy Chief Minister and Finance Minister Ajit Pawar.

He said VAT was currently levied on transfer of copyright of films for the purpose of exhibition in theatres.

Many states did not levy this tax, and to encourage the film industry in Maharashtra, which has a major potential for employment generation, Pawar said he proposed to waive the VAT.

Filmmaker Mukesh Bhatt, who is also the Vice President of the Film and TV Producers Guild, welcomed the move.

"While giving the film print to a distributor for release, a producer has to pay VAT. Besides, he has to pay octroi, service tax, excise; apart from entertainment duty of 45 per cent which is the highest in the country," Bhatt noted.

Similarly, to provide impetus to Marathi films and serials, the government would make special efforts to construct sets and other facilities at Chitranagari in Kolhapur, Pawar said.

An amount of Rs 10 crore will be provided for the same, he said.