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With
the advent of electronic technologies, producers now
possess about a hundred different copyrights on their
films. This has provided them new earning avenues. They
are no longer solely dependent on theatre releases to earn
from their productions.
The
most lucrative of these rights are television, satellite
and DVD. Except for music rights, which they sell outright
to the music companies, producers part with other
copyrights only for a limited period. After expiry of the
period, the rights revert back to them.
The
state's sales tax department held that when producers
parted with the copyrights on their films, they
effectively 'sold' the rights, thus attracting VAT.
Producers, on the other hand, contended that unlike music
rights, they did not sell outright the other rights of
their films and so imposing VAT on such transfer
agreements was unjustified.
IMMPA
president T.P. Agarwal said that Bollywood filmmakers,
especially individual producers, already weighed down by
multiple taxes at various stages of filmmaking, have been
feeling the pinch of this additional tax.
'At
four percent of the cost of the rights agreement of each
film, each time a producer is required to shell out
several hundred thousands of rupees by way of VAT,'
Agarwal told IANS.
Corporate
houses that have entered the film industry have been not
as vociferous in their demand for removal of VAT from
rights transfer.
The
IMMPA delegation informed Deshmukh that while each rupee
spent on making films count to the individual producers as
they make films on borrowed money, the corporates are
flush with public money.
'Therefore
it matters little to them if they have to pay a little
extra by way of VAT,' one of the IMMPA delegates who
attended the meeting told IANS.
Source
: By India PRwire, dated 19/12/2007
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