Kerala Local Authorities Entertainments Tax Act, 1961, will be amended to impose a monthly entertainment tax of Rs 10 on cable and dish TV, and Internet subscribers. 

The decision has been taken on the basis of the recommendation made by the Fifth Finance Commission.

Collection of entertainment tax is the prerogative of local bodies. At the moment, mainly because of certain exemptions granted by the state, the share of entertainment tax in the total own tax revenue of grama panchayats is a paltry 2 per cent, and 10 per cent for urban local bodies. 

What’s more, it was on the decline for the last five years. The latest move is expected to increase the own tax revenues of local bodies that had taken a serious hit when the state had exempted theatres from paying entertainment tax in the wake of GST. 

The entertainment tax for a movie ticket was 25 per cent. The state spared the film industry of entertainment tax to protect it from the huge GST imposed on it.

Cable and dish TV, and internet subscribers are now out of the purview of entertainment tax. 

This is the reason why the fifth SFC has sought an amendment of section 2(4) of the Kerala Local Authorities Entertainments Tax Act, 1961. 

“The receipt issued to the subscribers by the cable/dish operators shall also be computerized as envisaged in Section 5(1)(aa) of the 1961 Act in order to avoid malpractice,” the 5th SFC report noted.

The SFC has also recommended that entrance fees in tourism centres and agricultural farms and operation of houseboats should be brought under the purview of entertainment tax by making necessary amendments to section 2(4) of the Kerala Local Authorities Entertainments Tax Act, 1961. 

“The entertainment tax can be collected by local bodies at the starting point of a houseboat journey, or at ticket counters of tourism centres and agricultural farms,” the SFC report said. 

The government, however, has deferred a decision for further examination.  – Deccan Chronicle