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

Karnataka Labour Minister Santosh Lad said the state purchases movie tickets worth Rs 4 crore a year

The Karnataka assembly has given its nod to a bill that proposes a cess of up to 2 percent on movie tickets and OTT subscription fees but there is little clarity on how the levy will be implemented.

While a cess can be collected on movie tickets, it won’t be easy for over-the-top (OTT) platforms such as Netflix and Amazon Prime. Labour department officials told Moneycontrol they are planning to frame rules.

“We have already started preparations for the rules. The draft rules will be published in the public domain. We are also planning to conduct a stakeholder meeting on the cess collection," an official told Moneycontrol on condition of anonymity.

The official refused to divulge details on how the cess would be collected from OTT platforms. "We have some framework in mind. We are still working on the modalities,” the official said.

The Karnataka assembly passed the Cine and Cultural Activists (Welfare) Bill, which proposes to use the cess for the benefit cinema and other artistes, on July 23. The council had given its nod earlier. Once the governor gives his nod, the bill becomes law.

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

“This bill will help more than 50,000 unorganised workers in the state's cinema and other cultural sectors. Thanks to everyone who helped pass this bill unanimously in both houses,” statelabour minister Santosh Lad posted on the X platform, formerly Twitter.

In the assembly, Lad said, “We are charging a minimum of one percent and a maximum of two percent on every ticket buyer. It won’t be a big burden. The government will also provide funds for the welfare of these workers.”

People in Karnataka purchase movie tickets worth Rs 4 crore a year. “About 50,000 people are working in the cinema industry. If allied sectors are included, the number increases to about 70,000,” he said.

Legal experts say there is already a Central Act (Cine Workers Welfare Fund Act, 1981) for the welfare of cinema and cultural artists in the country.

Also, read: PVR Inox Q1 net loss widens to Rs 178 crore as Bollywood fails to cheer box office

"Entertainment and labour are state subjects, and Karnataka is free to enact a law. In many areas, states adopt central laws and make their own rules, which is permitted,” a legal expert told Moneycontrol requesting not to be identified. “Even in concurrent subjects, there need not always be conflict. Central and state laws may coexist without stepping on each other’s toes. However, the governor may have his political reasons to delay, return the bill to the assembly, or refer it to the president."

The bill proposes 'The Karnataka Cine and Cultural Activists Social Security and Welfare Fund' to benefit cine and cultural activists in the state.

A “cine and cultural activists welfare cess” will be imposed on cinema tickets, subscription fees, and related establishment revenue in the state. The cess will range between 1 to 2 percent, as notified by the government. The rate will be revised every three years.