The state revenue department conceded to pressure from the multiplex industry and withdrew its decision to charge higher entertainment duty on movie tickets priced above Rs. 250.
Now, multiplexes are free to price tickets as they wish, and have to pay a flat duty of 45%.
In a bid to discourage multiplexes from hiking up ticket prices for movies that do well at the box office, a proposal to levy the additional duty had been approved by the state cabinet last Wednesday
When the minutes this decision came up for approval at the cabinet meeting on Wednesday, the revenue department proposed to withdraw it and continue with the existing entertainment duty on tickets.
Sources from the revenue department said pressure from the multiplex industry forced the government to withdraw the proposal as it would have led to an escalation of up to Rs. 45 a ticket.
“Multiplex owners had opposed the duty saying taxes are already high. They have promised to keep prices reasonable and not raise them unnecessarily,” said revenue minister Balasaheb Thorat and added that decision would also mean a respite for patrons, who had expressed concerns about the escalation of movie ticket prices.
Another minister, requesting anonymity, said the whole issue was one of tactics for revenue department.
“The tax holiday announced last week for single screen theatres in rural areas would have lost the department Rs50 crore a year, while the proposed hike would have earned them Rs. 30 crore a year,” he said. “Had they not proposed some way to recover that loss, the finance department would have raised strong objections. The proposal was always meant to be withdrawn.”