Karnataka governor approves bill imposing cess on movie tickets, OTT subscription

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Karnataka Governor Thaawarchand Gehlot has given assent to the Karnataka Cine and Cultural Activists (Welfare) Bill, 2024, which proposes a cess of up to 2 percent on movie tickets and OTT subscription fees for the benefit of cinema and 'cultural artists'.

In July 2024, the Karnataka Cine and Cultural Activists (Welfare) Bill was passed by the Karnataka Assembly and sent to the Governor for approval. Gehlot gave his assent on September 23.

According to the Act, a 'Cine and Cultural Activists Welfare Cess' will be imposed on cinema tickets, subscription fees, and related revenues within the state. The cess will range between one to two percent, as notified by the government, with revisions every three years.

Also, read: Karnataka likely to impose 2 per cent cess on movie tickets, OTT subscription fees

Mohammad Mohsin, principal secretary,  Labour Department, told Moneycontrol: "We will now frame the rules since it has become an Act. Since GST is already applied to cinema tickets, we can only collect the cess, which will range between one and two percent." On collecting cess from OTT subscription fees, he added: "We are working on the modalities for collecting the cess from OTT subscriptions, but it is likely to be linked with GST."

It may be recalled that the Karnataka Governor in August returned 11 bills passed by both houses. Later, the state government sent clarifications sought by the Governor for five bills, including the Karnataka Cine and Cultural Artists (Welfare) Bill, 2024. Officials from the Labour Department said that only a welfare cess will be applied to the cinema ticket fare, as the state government cannot impose any tax other than GST

The funds collected from the cess will be transferred to the Karnataka Cine and Cultural Activists' Welfare Board. The board will include members such as the Minister-in-charge of the Department of Labour, the Additional Chief Secretary/Principal Secretary/Secretary of the Department of Labour, the Labour Commissioner, and 17 members nominated by the government, including representatives from the cine industry.

"Cine and cultural activists include any person employed in the cinema field, whether as an artist (such as an actor, musician, or dancer) or in any skilled, unskilled, manual, supervisory, technical, or artistic role. This also covers individuals involved in activities declared by the government for this Act," the bill states.

"Cine and cultural activists recognised by government-approved academies, such as the Karnataka Chalanachithra Academy, Karnataka Nataka Academy, Karnataka Sangeetha Nruthya Academy, Karnataka Janapada Academy, Karnataka Lalithakala Academy, Karnataka Yakshagana Academy, and Karnataka Bayalata Academy, are covered under this bill," it adds.

Also, read: Karnataka nod to bill for welfare cess on movie tickets, OTT subscriptions but implementation unclear