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Karnataka HC stays entertainment tax order on Kannada films
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BANGALORE: A division bench of the Karnataka High Court has stayed the operation of a 17 September 2008 order of a single bench, quashing a provisio of Section 4 of the Karnataka Entertainment Tax Act 1958. Exhibitors of Kannada will now have to pay Rs 48 per show instead of Rs 118.

The exhibition of non-Kannada films, however, will still attract an entertainment tax of Rs 118.

The provisio allowed the state to levy entertainment tax for the state’s languages - notably Kannada, Konkani, Kodava, Tulu and Banjara and a different one for exhibiting films of other languages in Karnataka.

Contesting that the Kannada film industry was small and ill-equipped to compete with films of other languages, the State had filed an appeal, stating that by virtue of the earlier single bench order, it was forced to collect Rs 118 per show irrespective of the language of a film.
The State earns about Rs 560 million annually by way of entertainment tax from 790 theatres. Twenty nine per cent of the revenue comes from theatres in Bangalore.

An Ernst & Young report pegged the revenue of the Kannada film industry for FY 2009 at just about Rs 500 million, a little more than 2 per cent of the Rs 17.73 billion revenues earned by the South Indian Film industry made up of the four states – Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.

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