ENTERTAINMENT TAX IN TAMILNADU

INTRODUCTION

The term ‘Entertainment’ means the action of providing or being provided with amusement or enjoyment. Initially, entertainment taxes were levied by the British Government when people in masses participated in any activity, in order to prevent any form of rebellion against the British Monarch. Levy of this tax continued even in the independent India without any deviation from the rates fixed by the Britishers. In the year 1939, the Tamil Nadu Entertainment Tax Act was passed repealing the Madras Local Authorities Entertainments Tax Act, 1929. This Act was last amended in 2013 and was subsumed by the Tamil Nadu Goods and Services Tax Act in the year 2017 except those levied by the local authorities. This led to a huge cry amongst the film producers and theatre owners claiming that it amounts to double taxation. This paper tries to point out if levy of entertainment tax under the GST and by the Local Authorities amounts to double taxation.

In spite of subsuming the levy of entertainment tax under the GST, the local authorities are given the power to levy entertainment tax which is in addition to the levy and collection of GST. pa associates here trying to explain detailly about entertainment tax and how it was evolved in the state and important history aspects

CONSTITUTIONAL BASIS

Article 246 of the Constitution of India provides for demarcation of powers to make laws between the Union and the States. In this regard, Article 246(3) read with Entry 62 of the List-II (State List) provides the authority to the State Governments to make laws with respect to levy and collection entertainment taxes

PRE-GST REGIME

The Constitutional (One Hundred and First Amendment) Act, 2016 has brought in the Goods and Services Tax (GST) thereby providing for one nation one tax which has subsumed various tax laws including the Entertainment Tax Acts.

Prior to the introduction of GST, the entertainment taxes were imposed and collected by the respective State Governments and was distributed to the local authorities after deduction 10% as collection charges.

ENTERTAINMENT TAX ACT 1939

Initially, entertainment taxes were levied by the British Government when people in masses participated in any activity, in order to prevent any form of rebellion against the British Monarch. Levy of this tax continued even in the independent India without any deviation from the rates fixed by the Britishers. In the year 1939, the Tamil Nadu Entertainment Tax Act was passed repealing the Madras Local Authorities Entertainments Tax Act, 1929. This Act was last amended in 2011 and was subsumed by the Tamil Nadu Goods and Services Tax Act in the year 2017 except those levied by the local authorities

 

DEFINITION

Sec 3 Of TNET Act’39 Defines, Entertainment means, “entertainment” means a horse-race or cinematograph exhibition to which persons are admitted on payment or television exhibition for which persons are required to make payment by way of contribution, or subscription, or installation or connection charges or any other charges collected in any manner whatsoever or an amusement or a recreation parlour where a game such as bowling, billiards, snooker or the like is provided or direct to home service or a cricket tournament like the Indian Premier League or the Champions League Twenty 20 cricket tournament conducted by the Board of Control for Cricket in India or any other sports tournament conducted by any person or body of persons for which persons are required to make payment for admission.

 

ROAD MAP OF ENTERTAINMENT TAX ACT

 

Ø  1926 : Madras local authority tax was introduced, in this local authorities had  given power to levy tax also Entertainment activity. This is the tax imposition for entertainment were started in Tamilnadu.

Ø  10-06-1939 : New enactment called Madras Entertainment Tax Act’1939 was introduced by British people dedicatedly for imposing tax on entertainment, This act was repealed 1926 enactment.

Ø  1969 : When the name of the state changed from Madras to Tamilnadu, the act name also had been changed.

Ø  22-07-06 : Granted exemption from levy of taxing New Films which was titled in Tamil language.

Ø  20-11-06 : Exemption had been extended to old Tamil films.

Ø  27-03-08 : Granted exemption to levy tax on cable tv operators from Cinematography film exhibited on TV

Ø  23-07-11 : Guidelines issued by the State government to claim exemption on Tamil films such as 1) Tamil name 2) “U” Certificate 3) No violence in the movie 4) Tamil culture oriented film

Ø  2011 : Act had been amended, new term IPL and DTH included in the Act

Ø  2014 : Committee formed by state government to monitor Tamil films to issue tax exemption certificate.

Ø  2015 : Dubbed film concept omitted

Ø  2016 : GST 101 constitutional amendment made in the parliament.

Ø  23-06-17 : State government passed GST act in the assembly. TNGST’2017

Ø  24-06-17 : Since constitutional amendment shifted power from state government to local authorities, TN government introduced brought act with tax imposing power by local authorities, i.e Tamilnadu Local Authorities entertainment tax act.2017

Ø  16-10-17 : In order to make theatre to withdraw from the strick, the government was issued revised rates for films exhibited in theatres.

Ø  23-05-20 : Hon’ble Governor of TN issued time extended notification for Assessment, or limitation affect due to Covid 19 lockdown.

 to be continued ....

It is the introduction part of entertainment tax, will see GST implementation and post implementation impact in the upcoming post.

@ PA Associates (Tax and legal consultancy), Medavakkam, Chennai - 600100.

If you have doubts or clarification required on entertainment tax implication in your business, please reach us at 87544 72172 / paassociatesmail@gmail.com / www.paassociate.in / Auditor from medavakkam