‘The Kerala Story’ declared tax-free in these states. What does it mean?
While the practice of granting tax exemption to films is not new, it has once again come into the spotlight in light of the recent row over “The Kerala Story”.
'The Kerala Story' - a film by director Sudipto Sen that claims to depict the 'forced recruitment and conversion of young girls and women by the Islamic State' - has been at the centre of a controversy since it was released last week. The Haryana, Uttar Pradesh and Madhya Pradesh governments - both led by the Bharatiya Janata Party - have made it tax-free and BJP leaders, including prime minister Narendra Modi, have supported the film and called for other states to follow suit. Bengal and the ruling Trinamool, however, have swung the other way and banned 'The Kerala Story' over fears screening it could provoke communal disharmony.
Madhya Pradesh was the first state to make the film tax-free; chief minister Shivraj Singh Chouhan said last week the film should be 'watched by all'. On Tuesday Uttar Pradesh CM Yogi Adityanath tweeted the film had been granted a similar exemption in his state. This was followed by CM Manohar Khattar making it tax-free in Haryana a day later.
Also Read | Producers Guild of India raises strong objection on ‘state-enforced’ ban on The Kerala Story, says it is ‘distressed’
Last year, Vivek Agnihotri's 'The Kashmir Files' - an equally controversial movie accused by its critics of furthering a right-wing agenda - was similary backed by BJP-ruled states, including UP, MP, Haryana, Karnataka (which votes in an Assembly election Wednesday), and Goa.
What does the 'tax-free' status for a film mean?
Making a movie tax-free does not mean you get tickets for free; you still might, but that is the decision of the producers or those screening the film at theatres.
What it does mean is that the state in question has waived levy of entertainment tax and, therefore, tickets are available at a discount.
In India, states charge a tax on the screening of movies and this cost is added to that of the ticket. 'Tax-free' means you don't have to pay this tax, which is up to nine per cent extra.
How does this work?
Under the Goods and Services Tax regime, movie tickets are taxed at either 18 per cent (if it costs over ₹100) or 12 per cent (if it costs below ₹100).
A 'tax-free' notice means the state is waiving collection on its half of that amount, so taxes are reduced to either nine per cent or six per cent, depending on ticket price.
Who decides if a film is 'tax-free'?
As noted above, states can take this decision independently of each other and the centre.
The decision is often based on the film's perceived social significance, as well as other potential positive impacts, such as promotion of tourism or a local industry.
There is no fixed criteria for granting tax exemption to any film.
A 'tax-free' status is highly valued by filmmakers as it is seen as an endorsement by the government and can enhance the film's image and publicity. The status may not have a direct impact on the film's financial success but it is seen a significant boost in the film industry.