Fresh excise proposed for
audio - video tapes

The Finance Bill of 1997, which is still awaiting the government’s nod, in its chapter 85.24, proposes that “records, tapes and other recorded media for sound or other similarly recorded phenomena, including matrices and masters for the production of records” be brought under the purview of fresh excise duty.

The industry argues that since the recorded tapes are essentially creative and intellectual output, it is unjustified to bring the same under the tax net.

Though the Bill has excluded computer software and magnetic tapes from being taxed, the other similar recorded materials, such as, gramophone records, audio-video tapes and cassettes and magnetic discs are proposed to be taxed. While an excise duty of 18 per cent is to be charged on them, 8 per cent excise duty is proposed to be levied on recorded tapes whose width does not exceed 15 mm, provided they are not a copy of already recorded meterials. Which, the industry thinks, is small mercy.

It is certain that if the government accepts the proposal, it will hit the music and television industries the most, besides affecting the film industry indirectly as both the audio and video tapes and cassettes are bound to go up.

The industry also detects a lacuna in the proposal as the excise duty is sought to be levied uniformly on all recorded material. It contends that since the cost of the recorded materials varies from recording to recording, depending on what is recorded, it is improper to suggest that all such materials be taxed at 18 percent flat. The industry is unanimous in its opinion that no fresh levy should be imposed on recorded material. Since blank audio and video tapes are already being taxed, it amounts to double taxation, the industry argues.

Taking up cudgels on behalf of the entertainment industry, Pahlaj Nihalani, president of the Association of Motion Picture and Television Progr-amme Producers (AMPTPP), took up the matter with prime minister IK Gujral last week. He urged Gujral to repeal the controversial chapter from the Finance Bill of 1997 to save the industry from being put under an additional financial burden. In his letter to the prime minister, Nihalani pointed out that taxation on the entertainment industry starts at the basic level when the producer buys audio and video tapes, and goes on till the time the finished product is ready for the consumer.

Since the film industry is going to be affected substantially if the proposal is passed, Nihalani pointed out that over taxation of the industry would further hinder its growth. He said that the film industry is the most heavily-taxed industry in India and cited the Entertainment Tax and Countervailing Duty on raw stock as the most offensive taxes as both are uncalled-for levies. He regretted that the finance ministry had now suggested that even the industry’s creativity be taxed to take its financial burden to unbearable limits.