India: Karnataka to impose tax on OTT subscription fees, movie tickets

The Congress government in the southern Indian state of Karnataka is planning to impose cess on movie tickets as well as Over-the-Top (OTT) subscription fees to support the film industry. Karnataka Cine and Cultural Workers (Welfare) Bill, 2024 was tabled in the state assembly on Friday (Jul 19) and if passed, the cess levied could range from one to two per cent. 

The additional revenue created by the taxes would be used to fund social security benefits such as the Provident Fund (PF) and Employees' State Insurance (ESI) for the cine workers. 

"Any individual working in the film industry as an artist (actor, musician, dancer, etc.) or in any manual, supervisory, technical, artistic, or unskilled capacity is considered a cinema and cultural activist," the bill reads.

"This also applies to people who are involved in activities that the government has declared in connection with this Act," it added. 

The bill also demands the creation of a seven-member welfare board that will manage the funds collected for cine workers and cultural activists. According to estimates by the Karnataka Film Workers Artists and Technicians Union, there are 2,355 workers in the state working on films and shows. 

Labour Department Secretary Mohammad Mohsin highlighted there were plans in the pipeline to impose a tax on theatrical plays performed in the state as well. 

Karnataka Assembly's Leader of the Opposition and BJP MLA R Ashoka criticised the move saying Congress had become a 'pauper government'. 

"The price of petrol, diesel and everything is rising. They have put a tax on movie theatres and OTT subscriptions also. This government has become a pauper government. So there is no money. That's why they are generating the money," said Ashoka. 

Watch | Karnataka 'caste census' report submitted to CM Siddaramaiah

State coffers empty? 

Chief Minister Siddaramaiah-led state government imposing tax on OTT is not expected to go down well with the consumers, especially as the freebie politics have cost the exchequer plenty in the last year. 

Earlier this month, Karnataka State Road Transport Corporation (KSRTC) said it was planning to hike bus fares by at least 20 per cent after reporting an operating loss of Rs 295 crore ($35 million) in the last three months.

Also read | India: Karnataka to hike bus fare after free ride scheme for women proves expensive

The decision was necessitated due to the launch of the Shakti scheme under which women passengers have been allowed to travel in state buses free of cost. 

The scheme was one of the major poll planks of the party that became an instant hit with the women. However, the scheme's monetary repercussions have outweighed the electoral gains in only a year. With the coffers running dry, the government is now after the common man yet again. 

(With inputs from agencies)